
Uass_Li - - 

Book_ 



REPORT TRANSMITTED BY THE 
POSTMASTER GENERAL 



TO THE 



COMMITTEE ON CLAIMS 

HOUSE OF REPRESENTATIVES 



IN RELATION TO 



"A BILL FOR THE RELIEF OF THE LEWIS 
PUBLISHING COMPANY" 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1911 



REPORT TRANSMITTED BY THE 
POSTMASTER GENERAL 



TO THE 



COMMITTEE ON CLAIMS 

HOUSE OF REPRESENTATIVES 



IN RELATION TO 



"A BILL FOR THE RELIEF OF THE LEWIS 
PUBLISHING COMPANY" 




WASHINGTON 

GOVERNMENT PRINTING OFFICE) 

1911 



\\£ b 



h * 






Post Office Department, 
Office of the Postmaster General, 

Washington, January 23, 1911. 
My Dear Sir : Complying with your request, I have the honor to 
transmit herewith certain data, documents, and exhibits, prepared in 
the offices of the Assistant Attorney General for the Post Office 
Department and the Third Assistant Postmaster General, relative 
to a bill introduced by Congressman Bartholdt, of Missouri, entitled 
"A Bill for the relief of the Lewis Publishing Company." 
Yours, very truly, 

Frank H. Hitchcock, 

Postmaster General. 
Hon. George W. Prince, 

Chairman Committee on Claims, 

House of Representatives, Washington, D. C, 

2 



REPORT TRANSMITTED BY THE POSTMASTER GENERAL TO THE 
COMMITTEE ON CLAIMS, HOUSE OF REPRESENTATIVES, IN 
RELATION TO "A BILL FOR THE RELIEF OF THE LEWIS PUB- 
LISHING COMPANY." 



Post Office Department, 

Washington, January 23, 1911. 
On June 13, 1910, Mr. Bartholdt, of Missouri, introduced the fol- 
lowing bill (H. K. 26799), which was referred to the Committee on 
Claims and ordered to be printed: 

A BILL For the relief of the Lewis Publishing Company. 

Be it enacted by the Senate and House of Representatives of the United 
States of ^America in Congress assembled, That the Secretary of the Treasury 
be, and he is hereby authorized and directed to pay to the Lewis Publishing 
Company, of University City, Saint Louis County, Missouri, out of any moneys 
in the Treasury of the United States not otherwise appropriated, the sum of 
one million five hundred thousand dollars for injuries wrongfully inflicted upon 
the said company and its periodical publications by the United States authori- 
ties : Provided, That only so much of said amount shall be paid to said com- 
pany as the Court of Claims shall find to be warranted by the facts in the case. 

The claimant, the Lewis Publishing Co., of St. Louis, Mo., for 
whose relief the above-named bill was introduced, bases its claim for 
alleged damages upon two separate and distinct administrative acts of 
the Post Office Department ; one of them, the withdrawal, on March 
4, 1907, for noncompliance with the provisions of the statute, of the 
second-class mail privilege, or cent-a-pound rate of postage, from two 
monthly magazines, to wit, the Woman's Magazine and the Woman's 
Farm Journal, published by the company, and the insistence upon 
payment, and collection in part, of postage at the rate of 1 cent for 
each 4 ounces, or fractional part thereof, on all copies of these pub- 
lications mailed between the 1st day of October, 1905, and the 5th 
day of March, 1907, in excess of the number mailed to legitimate sub- 
scribers and an equal number mailed as sample copies, together with 
the necessary examination of the publishing house, books, records, and 
files of the company for the ascertainment of the facts upon which 
such official action was based: the other, the issuance, on July 6, 1905, 
under authority of sections 3929 and 4041, Eevised Statutes of the 
United States, upon evidence satisfactory to the Postmaster General, 
of a fraud order against the People's United States Bank, an alleged 
popular savings institution, chartered under the laws of the State 
of Missouri, located at University City, a suburb of the city of St. 
Louis, of which E. G. Lewis, the president of the Lewis Publishing 
Co., was the promoter, the result of which was the denial, for a time, 
to the bank and its president, of the delivery of their mail. 

8 



4 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

CONTROVERSY RELATIVE TO THE SECOND-CLASS MAIL PRIVILEGE. 

Before giving an account of the controversy between the Post Office 
Department and the Lewis Publishing Co. as to the right of the latter 
to the benefit of the second-class mail privilege for its two publica- 
tions, the Woman's Magazine and the Woman's Farm Journal, in the 
condition in which they were found, and under the circumstances 
attending them at the time their respective certificates to that privi- 
lege were revoked, it is deemed proper, as a matter of convenience, to 
quote the statutes of the United States under the authority of which 
such benefits and privileges are conferred and by which the rates of 
postage are established, which are as follows : 

[Act of Mar. 3, 1879 ; 20 Stat. L, 359.] 

Sec. 10. That mailable matter of the second class shall embrace all news- 
papers and other periodical publications which are issued at stated intervals, 
and as frequently as four times a year and are within the conditions named in 
sections twelve and fourteen. 

Sec. 12. That matter of the second class may be examined at the office of 
mailing, and if found to contain matter which is subject to a higher rate of 
postage, such matter shall be charged with postage at the rate to which the 
inclosed matter is subject : Provided, That nothing herein contained shall be so 
construed as to prohibit the insertion in periodicals of advertisements attached 
permanently to the same. 

Sec. 14. That the conditions upon which a publication shall be admitted to 
the second class are as follows : 

First. It must regularly be issued at stated intervals, as frequently as four 
times a year, and bear a date of issue, and be numbered consecutively. 

Second. It must be issued from a " known office of publication." 

Third. It must be formed of printed paper sheets, without board, cloth, 
leather, or other substantial binding, such as distinguish printed books for 
preservation from periodical publications. 

Fourth. It must be originated and published for the dissemination of infor- 
mation of a public character, or devoted to literature, the sciences, arts, or some 
special industry, and having a legitimate list of subscribers : Provided, however, 
That nothing herein contained shall be so construed as to admit to the second- 
class rate regular publications designed primarily for advertising purposes, or 
for free circulation, or for circulation at nominal rates. 

Sec 17. That mail matter of the third class shall embrace books, transient 
newspapers and periodicals, circulars, and other matter wholly in print (not 
included in section twelve), proof sheets, corrected proof sheets, and manu- 
script copy accompanying the same, and postage shall be paid at the rate of 
one cent for each two ounces or fractional part thereof, and shall be fully pre- 
paid by postage stamps affixed to said matter. * * * 

[Act of Mar. 3, 1885 ; 23 Stat. L, 387.] 

All publications of the second class, except as provided in section twenty-five 
of said act (act of Mar. 3, 1879), when sent by the publisher thereof and from 
the office of publication, including sample copies, or when sent from a news 
agency to actual subscribers thereto, or to other news agents, shall, on and 
after July first, eighteen hundred and eighty-five, be entitled to transmission 
through the mails at one cent a pound or fraction thereof, such postage to be 
prepaid as now provided by law. 

[Act of June 9, 1884 ; 23 Stat. L, 40.] 

That the rate of postage on newspaper and periodical publications of the 
second class, when sent by others than the publisher or news agent, shall be 
one cent for each four ounces or fractional part thereof, and shall be fully 
prepaid by postage stamps affixed to said matter. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 5 

[Act of Mar. 3, 1901 ; 31 Stat. L., 1107.] 

When any publication lias been accorded second-class mail privileges the 
same shall not be suspended or annulled until a bearing sball have been granted 
to the parties interested. 

In connection with the foregoing statutes, the following regula- 
tions have been made and published for guidance in their con- 
struction : 

[Circular III, issued Dec. 20, 1902.] 

Paragraph 11. Copies of each issue of a publication admitted to the second 
class of mail matter may be mailed by the publisher at the pound rate of 
postage as follows: 

(a) To all legitimate subscribers. 

(1>) An equal number of sample copies, but no more, to persons who are not 
subscribers for the purpose of inducing them to subscribe for, advertise in, or 
become agents for the publication, and for such purposes only; provided each 
sample copy is plainly marked "sample copy" on the exposed face of the pub- 
lication or its wrapper, or on the wrapper of the package which may contain a 
bulk number of sample copies. Sample copies must not be inclosed in the same 
package with copies intended for subscribers. 

Paragraph 13. If sample copies in excess of the number hereinbefore specified 
be presented for mailing, they are not entitled to the pound rate of postage. 
They are chargeable with the transient second-class rate of 1 cent for each 4 
ounces or fraction thereof, to be prepaid with stamps affixed on each separately 
addressed copy or package of copies. 

[Circular XXV, issued Dec. 16, 1905.] 

Paragraph 18. In enforcing the requirements of law as to a legitimate list 
of subscribers the following will be recognized as constituting actual sub- 
scriptions : 

First. Direct subscriptions to the publisher by the subscriber when paid for 
by him. 

Second. Subscriptions to the agent of the publisher when actually paid for 
by the subscriber himself. 

Third. Copies regularly sold by newsboys or local agents or news agents. 

Fourth. Copies regularly sold over the publisher's counter. 

Fifth. Copies sent as bona fide exchanges with other publications admitted 
to the second class, one copy for another. 

Sixth. Individual subscriptions designed as bona fide gifts when paid for by 
the donors for the benefit of the recipients. Such subscriptions will be limited 
strictly to those coming within that definition and will not be permitted to be 
used as a cover for an advertising or other purpose of the publisher or donor. 
Under this same rule and limitation the publisher himself may become the 
donor of such gift subscriptions, but in all cases the proportion of these sub- 
scriptions to the whole list will be considered and given weight in determining 
the legitimacy of such lists. In this latter class may be included copies sent to 
prove insertion of advertisements. * * * 

Paragraph 31. It is unlawful for a publisher or news agent to mail, ostensibly 
for himself and at the rates accorded by law to him, as subscribers' copies or 
as alleged samples, copies of his publication purchased by and really the prop- 
erty of others, and sent in the mails on their behalf. A publisher is not pre- 
vented from acting for a purchaser, but the lawful rate of postage — 1 cent for 
each 4 ounces or fraction thereof — must be paid on all copies so sent in the 
mails to third persons, the same as if they were mailed by the purchaser 
himself. 

the woman's magazine and the woman's farm journal. 

The Winner Magazine, published by the Mail Order Publishing 
Co., St. Louis, Mo. (predecessor of the Lewis Publishing Co.), was 
admitted to the second-class mail privilege in December, 1899. and 
on the 21st day of August, 1902, its name was changed to the 



6 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

Woman's Magazine; whereupon application was made by the pub- 
lishers for its admission to the second-class mail privilege under its 
new name, as required by section 443, Postal Laws and Regulations of 
1902. Pending consideration of this application by the Post Office 
Department, a temporary permit, or" certificate of authorization, to 
the benefit of the pound rate of postage was issued by the postmaster 
at St. Louis, Mo., on August 22, 1902, in the following form : 

St. Louis, Mo., August 22, 1902. 
Hon. E. C. Madden, 

Third Assistant Postmaster General, Washington, D. C. 
Sir : I inclose herewith a copy of the Woman's Magazine, a monthly, pub- 
lished, in this city, together with application for admission to the mails at the 
pound rate of postage. 

This publication has heretofore been entered under the name of " The Win- 
ner Magazine," and this application is made necessary by reason of the change 
in name. 

I have considered it advisable to issue a temporary permit in this case, pend- 
ing decision of your office. 

Respectfully, F. W. Baumhoff, Postmaster. 

Before the receipt of this communication by the Third Assistant 
Postmaster General, the notice of change of name and request for re- 
entry had been brought to the attention of the Third Assistant Post- 
master General by the agent or attorney of the publishing company, 
and the postmaster at St. Louis was addressed as follows : 

Washington, D. C, August 25, 1902. 
Postmaster, St. Louis, Mo. 

Sir: The department has been informed that the name of the Winner will 
be changed to the Woman's Magazine, and an application will be made through 
your office for its admission as second-class matter. 

A request has been made that the deposit provided in section 441, Postal Laws 
and Regulations, be waived in this case. Inasmuch as the Winner is entered 
as second-class matter, if you are satisfied that it would be perfectly proper 
to do so, you may waive the money deposit required by section 441 of the 
Postal Laws and Regulations to secure payment of the third-class rate of post- 
age upon all mailings of the Woman's Magazine pending consideration of the 
application for its entry as second-class matter upon change of name from the 
Winner. 

Respectfully, yours, H. M. Bacon, 

Acting Third Assistant Postmaster General. 

Under authority of the temporary permit thus granted by the 
postmaster at St. Louis, and provisionally acquiesced in by the 
Third Assistant Postmaster General, the Woman's Magazine enjoyed 
the benefit of second-class postage rates from August 22, 1902, to 
March 4, 1907, when the privilege was withdrawn by the Postmaster 
General, after two several hearings, to wit, on June 17, 1905, and 
April 30 and May 1, 1906, upon the disclosures of which it was found 
that the publication did not have a " legitimate list of subscribers," 
as required by the statute, and, furthermore, that it was " primarily 
designed for advertising purposes," and was being circulated at 
" nominal rates." 

The delay pending final action on the application of the Woman's 
Magazine of August 21, 1902, was due to two causes: First, the fact 
that the Post Office Department was at that time making general 
and extended inquiry into the second-class mail status of the so-called 
" mail-order publications," to which class the Woman's Magazine be- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 7 

longed, the investigations being- prosecuted by the Third Assistant 
Post master General through his special agents, and by the Post- 
master General by the arm of his force of inspectors, in addition to 
which a number of lawsuits had been brought by publishers of this 
class who were contesting the action of the Post Office Department in 
excluding their publications from the mails, the cases being then 
pending in the courts of the District of Columbia and elsewhere; 
while a second cause of delay was the halting and vacillating policy 
of Mr. Madden in dealing with the cases of the Lewis Publishing Co., 
as was manifest by his refusal to prosecute his inquiries in the order 
and manner directed by the Postmaster General, and his prolonged 
and inexcusable delay in taking final action thereon, having been oc- 
cupied almost 18 months in apparent effort to settle one branch of the 
cases, while his term of office had expired before he had reached a de- 
termination of the most important phase of the cases, and the one 
he had been directed first to settle, to wit, the question whether the 
publications were, upon all the facts, entitled to second-class postage 
rates. 

The Woman's Farm Journal was admitted to the second-class mail 
postage rates on December 2, 1891, which privilege it enjoyed from 
that date until the 4th day of March, 1907, when, after a hearing 
accorded the publishers on the 17th day of June, 1905, and on April 
30 and May 1, 1906, as required by the act of Congress of March 3, 
1901, it appeared that this publication did not have a " legitimate 
list of subscribers," that it was " primarily designed for advertising 
purposes," and that it was being circulated at "nominal rates," for 
which reasons the Postmaster General on the 4th day of March, 1907, 
revoked the certificate of authorization to the second-class mail privi- 
lege which had previously been accorded to it. 

In the case of the Woman's Farm Journal, there was no question 
as to the legality of the act of its original authorization to the second- 
class mail privilege, it having been duly admitted, as previously 
stated, on the 2d day of December, 1891, all the acts and omissions 
complained of by the Post Office Department being committed sub- 
sequently to that time, and being disclosed by inquiries into its sub- 
scription methods and objects of publication in relation to its rights 
to the use of the second-class mail postage rates for the successive 
issues of the publication. 

These so-called " mail-order publications " constitute a peculiar- 
type of newspaper enterprise, embracing a class of publications 
devoted in the main to the advertisement of articles of trade supplied 
through mail orders, whence the name. They are usually cheap in 
price, printed on inferior paper, and without just claim to special 
literary merit. 

The'act of March 3, 1879, under which the Woman's Farm Journal 
was admitted as second-class mail matter on December 2, 1891, and 
under which the Woman's Magazine was provisionally accorded the 
same privilege on August 22, 1902, requires that every newspaper or 
other periodical publication, to be entitled to the favored rates of 
postage which Congress has provided to aid in the dissemination of 
public intelligence, must have, among various other statutory require- 
ments, a " legitimate list of subscribers " ; must not be " primarily 
designed for advertising purposes " ; nor for " circulation at nominal 



8 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

rates." It was for the failure on the part of the Lewis Publishing 
Co. to comply with the mandatory provisions of this statute in having 
for their two publications, the Woman's Magazine and the Woman's 
Farm Journal, a "legitimate list of subscribers," together with the 
presence of the two prohibited conditions of a " primary design for 
advertising purposes " and a policy of circulation at " nominal rates," 
that the Postmaster General, after proper investigation, and after 
according to the publishers a hearing as required by law, was con- 
strained, on the 4th day of March, 1907, to revoke the certificate of 
authorization of each of these publications to the benefits of the 
second-class mail privilege. 

Under the statute just cited, as amended by the act of March 3, 
1885, the nominal rate of 1 cent a pound is given to the publishers of 
newspapers and periodicals who, having complied with all the re- 
quirements of the statute as to class, quality, and characteristics, 
offer to mail the same from a " known office of publication " and to 
" legitimate subscribers." Provision is also made for mailing, at a 
like rate, of sample copies of such publications, and the same rate is 
also accorded to regular news agents dealing in " legitimate " second- 
class mail publications, when mailing copies thereof to regular sub- 
scribers or to other news agents, but not to copies mailed as samples 
or to others than subscribers or news agents. 

It will be noticed that, under the statute, publishers are limited in 
the mailings of their publications to two classes of persons only; 
namely, to regular subscribers to the newspaper or periodical and to 
persons not subscribers thereto, but to whom the publication is sent 
as specimens or samples with a view of inducing the recipient thereof 
to subscribe to, advertise in, or become an agent for such publication. 
From this it will be seen that the publisher can, within the limit of 
his statutory rights, avail himself of the privilege of the cent-a-pound 
rate in mailing copies of the issues of his publication to either or both 
of these classes ; but if he transcend these limitations, he passes with- 
out the province of a publisher of second-class mail publications, and 
thereby disentitles himself to the benefit of the low rate of postage 
which Congress, in the interest of public intelligence, has provided 
for newspapers and periodicals possessing certain enumerated quali- 
ties and characteristics. 

As already stated, the two publications of the Lewis Publishing 
Co., the Woman's Magazine and the Woman's Farm Journal, were 
deprived of further access to the second-class mail privilege on the 
threefold grounds of (1) default of a "legitimate list of sub- 
scribers"; (2) the presence of a "primary design for advertising 
purposes "; and (3) the pursuit of a policy of " nominal circulation," 
and it now becomes necessary, in order clearly to understand the 
action of the Post Office Department in its dealings with these pub- 
lications, and in order to justify its final action therein, that its 
interpretation of these statutory characteristics, the one a positive 
requirement and the other two prohibited negatives, should be clearly 
set forth. 

In pursuance of the act of March 3, 1879, and with a view to its 
proper construction in the requirement of a " legitimate subscription 
list," the Post Office Department, during the administration of the 
office of Third Assistant Postmaster General by Mr. Madden, made a 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 9 

number of expositions of that portion of the statute, embodying its 
several constructions in circulars of information to postal officials, 
postmasters, and the general public. The principal of these circu- 
lars of information were Circular No. VI, issued October 13, 1902; 
Circular No. Ill, issued December 16, 1902 ; and Circular No. XXV, 
issued December 20, 1905. Each and all of these circulars were pre- 
pared by Mr. Madden and signed and published by him in the exer- 
cise of the authority vested in him to make the classification of all 
mail matter, and conferred by the Postmaster General in the distri- 
bution of functions in the Post Office Department, by regulations 
made under the power of section 161 of the Revised Statutes of the 
United States. The construction of the statute relative to " legiti- 
mate lists of subscriptions " made by Mr. Madden at that time is 
worthy of careful consideration, because of the fact that, upon be- 
coming an employee of the Lewis Publishing Co., his mind suddenly 
experienced a radical change of view on important phases of the 
statute, an examination of which will reveal the fact that Mr. Mad- 
den, the Third Assistant Postmaster General, and Mr. Madden, the 
agent of the Lewis Publishing Co., are not only in sharp conflict 
of opinion, but that they entertain views on the same subject so strik- 
ingly inconsistent as to be impossible of reconciliation one with 
another. 

Under the statute, and as construed by the Post Office Department 
in these several circulars of information, a "legitimate list of sub- 
scribers " was held to include any, or all, of the following particular 
classes of the mailings of a newspaper or other periodical publica- 
tion: (1) Direct subscriptions to the publisher b}^ the subscriber 
when paid for by him; (2) subscriptions to the agent of the pub- 
lisher when paid for by the subscriber himself; (3) copies sold by 
newsboys, local agents, or news agents; (4) copies sold over the 
publisher's counter; (5) copies sent as bona fide exchanges; '(6) cop- 
ies sent to advertisers to prove insertion of advertisement, one copy 
to each advertiser; and (7) copies sent as bona fide gifts when paid 
for by the donor for the benefit of the recipient. 

Then, by the terms of the statute, and under the rules and regula- 
tions made in exposition of it, the mailing list of a newspaper or 
other periodical publication, holding a certificate of authorization 
to the second-class mail privilege, must contain no names other than 
such as are embraced in the classes just named. Should such list 
contain other names, or should other mailings be made under the 
pretext of being subscriptions, or under the guise of samples, the 
list as a whole would thereby become illegitimate, and, in effect, 
operate as a forfeiture of the benefits of the second-class mail priv- 
ilege, as this requirement is mandatory, and must be insisted upon 
in each and every case. 

Now. Congress has provided by the act of June 9, 1884 (23 Stat. L., 
40; Postal Laws and Regulations, sec. 455), a postage rate for the 
mailing of second-class mail publications by " others than publishers 
or news agents." Under this act any person not a publisher or 
news agent may mail second-class mail publications from any place 
whatsoever at the rate of 1 cent for each 4 ounces or fractional part 
thereof. In postal parlance this is usually called the transient sec- 
ond-class rate, because it is only transiently and occasionally used; 



10 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

the statute not contemplating either permanency of mailings or more 
than occasional appropriation of its benefits. 

While this rate was established for persons " other than publishers 
and news agents," it is not to be inferred that, under some conditions, 
the publishers of newspapers and other periodical publications would 
not be liable to the payment of the same rate. While, by full compli- 
ance with all the requirements of law, they are entitled to mail their 
publications at the pound rate of postage, yet they are limited in that 
privilege, as already indicated, to mailings to regular subscribers 
and an equal number as sample copies, and any attempted use of the 
second-class mail privilege for purposes other than this would bring 
them to the status of persons " other than publishers and news agents." 
The reason and justice of this limitation will be apparent when it is 
observed that to accord to the publishers of newspapers and other 
periodical publications a rate of postage which is denied to others 
similarly situated would be an unfair discrimination in favor of one 
part of the public and against another. From this it is easily de- 
duced that such publishers occupy a dual relation, being entitled to 
certain privileges and benefits in virtue of being publishers holding 
the second-class mail authorization, while other acts may be per- 
formed by them which are not done in the relation of such publishers, 
in which position they are analogous to a public official who does 
an act not in virtue of his office, but in some other capacity, or merely 
in the relation of a private citizen. 

But the establishment of this rate for " others than publishers and 
news agents," having in view only such occasional and temporary 
use of that privilege as would meet the ordinary conditions of per- 
sons not in the business of publishing newspapers and periodicals, 
does not preclude the possibility of its use by such publishers when 
not complying with those statutory requirements by which they are 
guaranteed the rates of postage specifically provided for newspapers 
and periodicals. 

As one of the grounds upon which the Postmaster General denied 
the second-class mail privilege to the Woman's Magazine and the 
Woman's Farm Journal was that they came within the prohibitions 
of the statute that forbids the publication of newspapers and peri- 
odicals "primarily designed for advertising purposes" or for "cir- 
culation at nominal rates." It is proper to say in this connection 
that it is held that a newspaper or other periodical publication is " pri- 
marily designed for advertising purposes " when advertisements con- 
stitute the main and controlling feature of the publication, and when 
the design of the publisher is not the dissemination of information 
of a public character or devotion to literature, the sciences, arts, or 
some special industry, or when it has for its chief purpose the carry- 
ing of advertisements either of articles, wares, and merchandise made 
or sold by the publisher or those offered for sale by advertisers using 
its columns; and that a publication is circulated at "nominal rates" 
when the subscription price consists of but a small part of the cost 
of producing the publication, such price being only an incident in 
putting it upon the market, the chief purpose being advertisements or 
other pecuniary interests of the publisher. It will be seen in the 
course of review of the cases of the Lewis Publishing Co. that E. G. 
Lewis, president of the company, and the chief owner of its stock 
and manager of its affairs, was also the promoter of numerous and 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 11 

various other business projects, all of which were advertised in the 
Woman's Magazine and the Woman's Farm Journal, from time to 
time, occupying the most attractive advertising portions of the pub- 
lications. It will be apparent that the subscription rates of these 
publications were brought within the prohibition of the statute when 
it is remembered that often less than 7 cents per annum constituted 
the net receipts for a yearly subscription to the Woman's Magazine 
and the Woman's Farm Journal, and that in many instances the price 
fell below 3 cents per annum after the deduction of allowances and 
commissions to agents. 

Mr. Madden, during his incumbency of the office of Third Assistant 
Postmaster General, not only adopted this construction of the statute, 
but also made it the subject of a number of department regulations 
and. furthermore, constantly insisted, in the regular course of admin- 
istration, upon the principle that the publishers of newspapers and 
periodicals, in their relation to the second-class mail privilege, were 
entitled to the pound rate of postage only for the mailings of the 
copies thereof to regular subscribers and an equal number sent as 
sample copies, and that all other mailings by them were subject to 
the transient second-class rate of 1 cent for each four ounces or frac- 
tional part thereof, prepaid by stamps affixed. Acting on this inter- 
pretation of the statute, he demanded the latter rate of postage in 
every case where the mailings of the publication did not fall under 
one of the heads above named, actual collections being constantly 
made thereunder and covered into the Treasury as a part of the 
postal revenues. 

Among the rules for the construction of the statutes governing 
the second-class mail privilege adopted and published by him for the 
guidance of the publishers of newspapers and periodicals, and em- 
bodied in circulars of information, are the following : 

If sample copies, in excess of the number hereinbefore specified (mailings to 
regular subscribers and an equal number as sample copies), be presented for 
mailing, they are not entitled to the pound rate of postage. They are charge- 
able with the transient second-class rate of 1 cent for each 4 ounces or fraction 
thereof, to be prepaid with stamps affixed on each separately addressed copy 
or package of copies. (Circ. Ill, par. 13.) 

It is unlawful for a publisher or news agent to mail, ostensibly for himself 
and at the rates accorded by law to him, as subscribers' copies, or as alleged 
samples, copies of his publication purchased by, and really the property of, 
others and sent in the mails on their behalf. The publisher is not prevented 
from acting for a purchaser, but the lawful rate of postage — 1 cent for each 4 
ounces or fraction thereof — must be paid upon all copies sent in the mails to 
third persons, the same as if they were mailed by the purchaser himself. (Circ. 
XXV, par. 31.) 

Notwithstanding the fact that Mr. Madden, at this time, in his 
zeal for his employer, the Lewis Publishing Co., vigorously protests 
that the Post Office Department has no statutory power, under any 
condition whatever, to enforce the collection of the transient second- 
class postage rate from publishers who hold a certificate of authori- 
zation to the second-class mail privilege when mailing copies of their 
publication from a " known office of publication," the fact remains 
that the records and files of the office of Third Assistant Postmaster 
General, during the eight years of his administration of it, are check- 
ered and plastered with letters and circulars of information in sup- 
port of the affirmative of that position, urgently and insistently 
demanding its payment in every case in which he believed such post- 



12 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

age to have accrued, and of entries and acknowledgments of such 
collections actually made in the course of administration. His effort 
to show, at this late hour, in his contentions on behalf of the Lewis 
Publishing Co., that the regulation in question was designed for, and 
in practice used as, an office rule of evidence in the determination of 
other statutory requisites to the second-class mail privilege, is not 
supported by the facts and falls to the ground in the face of a con- 
tinuous record of positive administration under the diametrically 
opposite construction of the statute. 

As actual and concrete instances of this policy of construction and 
administration, under the direction of Mr. Madden, the following 
instances of demands and collections of postage at the transient 
second-class rate from publishers who at that time were holding an 
entry to the second-class postage rate, and who mailed their publica- 
tions from a " known office of publication," are cited from the records: 
Progress Advertiser, Lexington, Miss., March 2, 1904, $96.38; Clarks- 
ton Republic, Clarkston, Wash., August 17, 1905, $33.40 ; The Tele- 
phone Register, McMinnville, Oreg., August 30, 1905, $25.67; Crab- 
tree's Saturday Press, Chattanooga, Tenn., October 10, 1905, $40; 
New Thought, Chicago, 111., November 20, 1905, $41.75; Rozhledy, 
Chicago, 111., November 27, 1905, $48.72 ; The Interior, Chicago, III, 
December 1, 1905, $48.19; Weekly Argus and Radical, Beaver, Pa., 
February 27, 1906, $470.90; Domestic Engineering, Boston, Mass., 
February 27, 1906, $16.38; The Telephone Register, McMinnville, 
Oreg., June 19, 1906, $13.01 ; The Homestead, Des Moines, Iowa, Feb- 
ruary 24 to July 7, 1906, $3,415.37. 

And, what is more strikingly to the point, Mr. Madden not only 
upheld and supported the present contention of this department in 
cases of publications of this character generally, but in the case of 
the Lewis Publishing Co., the relation of which to the Post Office 
Department furnishes the occasion for the company's alleged claim 
of damages, and whose active and zealous agent he now is, he upheld 
the same view and demanded or advised the payment of transient 
second-class postage from the company under conditions of their 
publications similar to those already cited in other instances, which 
position he now retracts and combats in his effort to secure for his 
employer a return of that postage which, under his own administra- 
tion and construction of the law, was collected from them. In proof 
of this the two letters following, signed by Mr. Madden and ad- 
dressed to the postmaster at St. Louis bearing upon this phase of the 
subject, will be of interest: 

Washington, D. C, April 6, 1906. 
Postmaster, St. Louis, Mo. 

Sir : In answer to yonr letter of April 2 on the subject of the Woman's Farm 
Journal and Woman's Magazine, published by the Lewis Publishing Co., you are 
informed that the direction that copies found to be in excess of those which the 
publishers are entitled to mail at the pound rate of postage are chargeable at 
the rate of 1 cent for each 4 ounces or fraction thereof, prepaid by stamps 
affixed, applies obviously to all excess mailings whether they be of the issue of 
October or any other month. The inquiry made by you was as to a particular 
number of copies of particular issues, and it was answered accordingly. Inas- 
much, however, as it is the duty of the postmaster to charge the lawful rate 
upon all mail matter passing through his hands, it would be your duty, when- 
ever the facts before you justify you in holding that the copies are in fact excess 
copies, to charge upon such excess the rate I have already mentioned, namely, 
the transient second-class rate. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 13 

With respect to your statement that you challenge the right of these publica- 
tions to further second-class privileges, you are informed that you should set 
out in a report all the facts upon which your challenge is based in order that 
proper action may be had by this office under the act of March 3, 1901. 

It is a part of the postmaster's duty to lay before this office any facts within 
his knowledge which tend to show that any publication mailed at his office is 
not entitled to the second-class mailing privilege. Such report should he de- 
tailed and should be accompanied by a statement of the evidence by which it 
may be supported in case a hearing may be decided upon. 
Respectfully, 

Edwin C. Madden, 
Third Assistant Postmaster General. 



Washington, D. C, March 80, 1906. 
Postmaster. St. Louis. Mo. 

Sir : Your letter of March 15, in which you call attention to a letter dated 
November 11, 1905, to which you received no answer, is received. 

You are informed that your letter of November 11 was referred to the Post- 
master General for his consideration. No action was therefore taken by this 
office. 

In response to the inquiry, contained in your letter of March 15, respecting 
the postage which should be collected on 300,727 copies of the October, 1905, 
issue of the Woman's Farm Journal, aggregating in weight 65,724 pounds, 
withheld from transmission by you as being in excess of the number of copies 
which the publishers are legally entitled to transmit at the pound rate of post- 
age, and 539.308 copies of the November, 1905, issue of the Woman's Magazine, 
aggregating in weight 107. 6S2 pounds, stated to be in like manner m excess of 
the number of copies which the publishers are entitled to transmit at the pound 
rate, you are informed as follows: 

Assuming, as matter of fact, that the copies withheld from transmission in the 
one case and mailed in excess in the other are copies in excess of the number 
which the publishers are entitled to mail at the pound rate of postage, as stated 
in your letter, then such excess copies are chargeable at the rate of 1 cent for 
each 4 ounces or fraction thereof, prepaid by stamps affixed. 
Respectfully, 

Edwin C. Madden, 
Third Assistant Postmaster General. 

FINDINGS AND DETERMINATIONS IN THE CASES OF THE WOMAN'S MAGA- 
ZINE AND THE WOMAN'S FARM JOURNAL. 

The request of the Lewis Publishing Co. that Congress pass a bill 
referring to the Court of Claims the consideration of its applica- 
tion for payment of damages on the alleged ground that it was 
injured by the administration of the Post Office Department in deny- 
ing to its publications — the Woman's Magazine and the Woman's 
Farm Journal — the second-class mail privilege, had its origin in an 
investigation commenced and prosecuted by the department in the 
spring of 1905 with a view of determining whether the publications 
in question were entitled to the benefits of that privilege. This 
investigation was prosecuted in its first stages by the post-office 
inspectors, officers appointed by law for the purpose of making such 
inquiries and investigations as the Postmaster^ General may deem 
proper in his administration of the Post Office Department and the 
postal system. Their inquiries were conducted in an orderly, capa- 
ble, and intelligent manner, and no suggestion has ever been made 
that at any stage they overstepped either the bounds of right or the 
limits of propriety. Mr. Madden, in his brief for the Lewis Pub- 
lishing Co., complains bitterly thjat an investigation should have 



14 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

been made by the Postmaster General under any circumstances 
whatever, claiming that all investigative power belonged to himself 
in virtue of his office as Third Assistant Postmaster General. In 
this contention he is forgetful of the fact that under the laws of 
the United States the duty is devolved upon the Postmaster General 
of enforcing and administering all statutes relative to the Post Office 
Department and to the postal system generally ; that the Postmaster 
General is constituted by law the head of the entire postal establish- 
ment; that all assistants and subordinates in the department or in 
the conduct of the system at large are under his control and sub- 
ject to his orders; that, whenever and wherever there are reasons to 
believe that any person or corporation having relations with the 
Post Office Department or in connection with the postal system is 
guilty of acts or omissions in conflict with the law, it then and 
there becomes the duty of the Postmaster General to interpose his 
authority and correct such delinquents. Mr. Madden, in this con- 
tention, is unmindful of the plain provisions of the law and regula- 
tions controlling the conduct of the Postmaster General. If he had 
turned to paragraph 9, section 12, Postal Laws of 1902, he might 
have satisfied himself of the authority of the head of the postal 
establishment, in proper cases, to perform acts which, under some 
circumstances, might have been assigned to subordinate function- 
aries in the distribution of the duties of the Post Office Department ; 
he would have found there this plain and mandatory provision : 

It shall be the duty of the Postmaster General " to superintend generally the 
business of the department and execute all laws relative to the postal service." 

From this it will be seen that the Postmaster General, in instituting 
and conducting the investigation complained of, was not only doing 
an act which he was by law authorized to do, but was rendering a 
public service which he was under solemn duty to perform. The 
suggestion that the Postmaster General was without authorit}^ di- 
rectly to make the investigation is so plainly inconsistent with every 
understanding of the duty of the head of an executive department 
of the Government, is so palpably absurd, that it needs but to be 
mentioned to be refuted. 

The several acts and omissions by the Lewis Publishing Co. which 
the Post Office Department considered obnoxious to the laws and 
regulations governing the classification of mail matter were first 
called to the attention of the Post Office Department by the post- 
master at St. Louis, who reported that the Lewis Publishing Co. 
was each month mailing many thousand copies of each of its two 
publications — the Woman's Magazine and the Woman's Farm Jour- 
nal — in excess of the number which under the laws of Congress and 
the postal regulations it was permitted to mail to persons who were 
regular subscribers to the respective publications and an equal num- 
ber of such copies sent as samples. 

This information came to the attention of the postmaster at St. 
Louis, Mo., by observation in the daily classification and handling 
of mails, and through an investigation of the records, files, and 
papers of the publishing house of the Lewis Publishing Co., at 
University City, a suburb of St. Louis, in the month of October, 
1905, the investigation being made by Post-Office Inspectors Ful- 
ton, Sullivan, and Stice. From these observations and investiga- 



RELIEF OF THE LEWIS PUBLISHING COMPANY, ' 15 

tions it appeared that the mailing lists of the Lewis Publishing Co. 
contained many thousand names of persons receiving the Woman's 
Magazine and the Woman's Farm Journal who were not " legitimate 
subscribers" thereto and who were not entitled to receive the pub- 
lication sent to them as samples because of the fact that the com- 
pany's lawful quota of sample copies did not warrant such mailings. 
It seemed to be the policy of the publisher to build up a very large 
clientele of subscribers not only for subscription purposes alone, but 
to meet the demands of advertisers whose advertisements were re- 
ceived upon the basis of a given circulation, and also to advertise gen- 
erally and aid in the promotion of the various business schemes and 
enterprises in which E. G. Lewis, president of the Lewis Publishing 
Co., was at that time and for some time theretofore engaged. Among 
the business enterprises and commercial schemes embarked in by Mr. 
Lewis at different times and advertised in the publications named, 
may be mentioned the following: University Heights Realty & In- 
vestment Co., World's Fair Contest Co., Development & Investment 
Co., United States Fiber Stopper Co., California Vineyards Co., 
Camp Lewis, and the People's/United States Bank 

Advertisements of one or more of these enterprises appear in the 
publications of the Lewis Publishing Co. for a greater or less period 
of time throughout the course of their promotion. 

It will be observed that the company, under the authority of its 
certificate of the second-class mail privilege, as the statutes were at 
that time understood and construed, and as they were applied in 
practical administration, did not permit, under any circumstance, 
the mailing of copies of the issues of these and other publications 
issued under like conditions, at the pound rate of postage, other than 
as such copies constituted a part of the regular and legitimate sub- 
scription list, and an equal number as specimens sent to persons with 
a view of inducing subscriptions, advertisements, or agencies. The 
relation of subscriber and publisher, when they exist as such in fact, 
is evidenced by a bona fide order for the publication in question, and 
its acceptance by the publisher, or the offer for it having its initia- 
tive with the publisher, and its acceptance by the subscriber, with the 
exception of the other classes of mailings of a minor character or 
named as permissible under the statute and regulations. 

As to the number of sample copies permitted to be sent by pub- 
lishers, it is noted that the statute is silent as to any limitation there- 
of, but as, in the very nature of things, the mailing of free specimen 
copies of a publication would constitute no more than an incident of 
the object of the publication, it is plain that a reasonable implication 
arises from the statute that the Postmaster General in administering 
the law would, in protection of the postal revenues and in the inter- 
est of the public mails, be compelled to place a reasonable limita- 
tion upon the number of copies of the issues of a second-class mail 
publication which would be carried at the cent-a -pound rate. Enter- 
taining this view of the construction of the statute, the department 
has, for the past several years, placed an express limitation upon the 
number of copies authorized to be sent for that purpose, and in order 
that these may be admitted to the mails they must be marked as 
" sample copies," put up in separate packages, and recorded and 
mailed separately. As to the validity and reason of the sample copy 
limitation to a number equal to the number sent in response to sub- 



16 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

scription demands, and no more, attention is called to the fact that a 
number of bills introduced in Congress with a view of regulating 
postage rates have placed specific limits upon the sample-copy privi- 
lege, thus indicating the sense of the legislative body as being in 
favor of such limitation. While it is true that in the act of March 3, 
1879, fixing the rate of 2 cents a pound, the words " including sample 
copies " are used, it is, nevertheless, plain that the mailing of sample 
copies was not the purpose of the statute, but only an authorized 
incident thereto, deemed to be proper in connection with it, it being 
manifest that authority for unlimited mailing of sample copies 
would be inconsistent with the object of the statute in providing sec- 
ond-class postage rates, but that the statute contemplated the privi- 
lege of mailing a limited number of copies for the purpose of calling 
attention to the merits of the publication and as a solicitation for 
subscriptions. A moment's reflection will convince any reasoning 
mind that the mailing of such copies continuously and in large and 
unlimited quantities could mean but one of three things — a free cir- 
culation of the publication, its circulation at nominal rates, or its 
conversion to advertising purposes, all three being inhibitions fixed 
by the statute. 

As an instance of the trend of legislative thought upon the sub- 
ject, attention is called to a bill introduced by Representative Dodds, 
of Michigan, in the Sixty-first Congress, on the 6th day of June, 
1910 (H/R. 22239), entitled "An act to admit to the mails as second- 
class matter periodical publications issued by or under the auspices 
of benevolent or fraternal societies and orders and institutions of 
learning or by trade unions, and for other purposes." in which, 
among other things, it is provided that the circulation of such pub- 
lications shall be limited to " copies mailed to members, exchanges, 
and bona fide subscribers, together with 10 per centum of such cir- 
culation in addition as sample copies." 

This bill passed the House by unanimous consent, without opposi- 
tion, thus placing the stamp of its approval upon the general policy 
of a limitation of the number of sample copies permitted to be 
mailed by the publisher of a newspaper or periodical, such limitation 
being deemed necessary for the purpose of preventing abuses in con- 
nection with the cheapened rate of postage accorded these publica- 
tions. 

In a bill introduced in the Senate on March 7, 1910, by Senator 
Carter, of Montana, for the reorganization of the Post Office Depart- 
ment and the postal system, entitled "A bill to codify, revise, and 
amend the postal laws of the United States," establishing the rates 
of postage for second-class mail publications, it was provided that 
sample copies within the limit prescribed may be mailed, at the elec- 
tion of the publisher, with one or more or all of the issues of the 
publication : Provided, That the aggregate number thereof mailed in 
any year up to and including any date shall not exceed 10 per cent 
of the total number of subscribers' and news agents' copies mailed in 
that year up to and including that date. 

While these measures have not become laws, yet the policy therein 
declared in relation to the mailing of sample copies by publishers at 
the cent-a-pound rate of postage, is significant in the fact that it 
throws the constructive judgment of both the House and Senate 
in favor of what is now the construction of the statute by the Post 



RELIEF OF THE LEWIS PUBLISHING COMPANY 17 

Office Department in placing proper limitation upon the mailing of 
such copies of the issue of a publication. Not only is the Post Office 
Department, in this construction of the statute, supported by the 
weight of legislative opinion as manifest in proposed legislation, 
but a number of important court decisions sustaining the depart- 
ment's regulation in this respect have been handed down within the 
last few years. In the case of William Cowper Conant v. The Post- 
master General, tried in the Supreme Court of the District of Co- 
lumbia, sitting in equity, Mr. Justice Anderson delivering the opin- 
ion of the court, which opinion is embodied in Circular IV, we find 
the following words as a summary of that opinion: 

While the statute does not put any express limitation upon the number of 
sample copies circulated, such copies must be samples in fact, and the publisher 
seeking to obtain the benefit of the statute must- show the utmost good faith 
and not attempt to evade it by any device. (See pars. 35 and 36.) 

The construction of the statute by the Post Office Department to the effect 
that the number of sample copies must not exceed the number actually cir- 
culated to subscribers is not only a reasonable interpretation of the law, but 
liberal to the publisher ; for wherever the publication regularly circulates more 
copies free than copies paid for there is an irresistible inference that the 
publication is chiefly designed for free circulation. (See par. 36.) 

In the case of the Homestead Co. v. Cortelyou, decided April 16, 
1906, in the supreme court of the District of Columbia, sitting in 
equity, Chief Justice Clabaugh, discussing subscriptions paid for by 
others and at their order mailed by the publishers, being sent for 
advertising purposes, and the liability of the publishers for transient 
second-class postage thereon, says : 

Supposing this paper had 10,000 legitimate subscribers and then sent out 
50.000 to people who were not subscribers but were sent in bulk, if you choose, 
paid for in bulk by some third party primarily for the purpose of advertising. 
I think it could not be urged that because the paper had the 10,000 legitimate 
subscribers that, therefore, they could be sent out to the number of 50,000 to 
people who were not legitimate subscribers, but which 50,000 were sent for the 
purpose of advertising primarily. Therefore, taking that view, I do not think 
it can be successfully urged that because it has a legitimate list of subscribers, 
therefore a lot of subscriptions which are not legitimate could be sent on the 
basis of the fact that they had a legitimate list of subscribers. I take it from 
this section, 448, that the rate that is given to the publisher is given for papers 
that are sent to subscribers and such sample c >pies as they may send out. 

Now it would follow, it seems to me, therefore, if we follow out the purpose 
and design of the law, that if papers were sent out that were not legitimate 
in their subscription, and were not sample copies, that these papers would be 
subject to a different rate, in other words, the transient rate, which would be 
1 cent for each 4 ounces or fraction thereof. So, I do not think it follows that 
every paper which is sent out from the publisher is entitled to the second-class 
rate merely because it has a legitimate list of subscribers and would have the 
right to send in addition sample copies. 

In the case of the United States v. George F. Terry and Henry 
W. Boshan, tried before Judge Clarence Hale, United States district 
judge for the district of Maine, at Portland, Me., in February, 1908, 
the defendants being indicted on a charge of conspiracy to defraud 
the Government of postal revenue by making and entering false 
records to the effect that certain copies of Sawyer's Magazine, pub- 
lished by the Sawyer Publishing Co., were subscribers' copies when, 
in fact, they were copies sent as samples, and vice versa, the court 
charged the jury as follows: 

The Government has offered section 456 of the Postal Regulations, which is : 
"The mailing by a publisher as sample copies of a larger number of copies 
86534°— 11 2 



18 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

than actually subscribed for in order to maintain a given circulation, or the 
continuous mailing of sample copies in excess of one hundred per cent of the 
number issued to regular subscribers, or of such copies continuously to the 
same persons, will be deemed evidence that the publication is primarily de- 
signed for advertising or free circulation, and the sample copies should be 
detained until the facts can be ascertained. The postmaster will promptly 
report the case to the Third Assistant Postmaser General." 

It is the duty of the court to instruct you, in the first instance, as to the 
regulation, that this regulation relates to the evidence which shall be controlling 
upon the department in the matter of second-class mail matter. And I in- 
struct you that, for the purposes of this case, it is a reasonable and proper 
regulation, and that, so far as you are concerned, it has the force and effect 
of law. 

Having thus defined and described a legitimate subscription list, 
and given the construction of the department as to the meaning of 
the statute in relation to sample copies, let us next proceed to ascer- 
tain the number of copies mailed as to subscribers and as sample 
copies in excess of the number authorized by the subscription lists of 
the Woman's Magazine and the Woman's Farm Journal. 

The postmaster at St. Louis held 300,721 copies of the October, 
1905, issue of the Woman's Farm Journal, aggregating in weight 
65,784 pounds,, because upon the best opinion obtainable such copies 
were in excess of the number authorized to be mailed as to subscrib- 
ers and as sample copies. 

Mr. Madden, in his brief for the House Committee on Claims, in 
support of the bill for the relief of the Lewis Publishing Co., makes 
serious complaint of this holding of the copies of the Woman's Farm 
Journal, and sets forth the circumstance as one of the grounds upon 
which damages in favor of the company are claimed, notwithstand- 
ing the fact that the postmaster, under the law and regulations, could 
have done nothing less than hold such copies, as they had been offered 
for transmission without the payment of a lawful postage thereon. 
Mr. Madden was at that time holding the office of Third Assistant 
Postmaster General, and the postmaster at St. Louis notified him 
of the fact that such copies were being held in default of payment 
of postage demanded at the transient second-class rate of the Lew T is 
Publishing Co. Answering a further letter of inquiry from the post- 
master at St. Louis, on the 30th day of March, 1906, respecting the 
detained copies of the Woman's Farm Journal, Mr. Madden advises 
the postmaster at St. Louis as follows : 

Assuming, as a matter of fact, that the copies withheld from transmission in 
the one case, and mailed in excess in the other, are copies in excess of the num- 
ber which the publishers are entitled to mail at the pound rate of postage, as 
stated in your letter, then such excess copies are chargeable at the rate of 1 
cent for each 4 ounces or fraction thereof, prepaid by stamps affixed. 

The postmaster had demanded the payment of the lawful postage 
upon the copies thus detained, and payment thereof having been 
refused he had no alternative, under his oath, but to refuse to trans- 
mit these copies of the publication through the mails. The post- 
master, as well as Mr. Madden, was aware of the obligation of sec- 
tion 4051 of the Revised Statutes of the United States (Postal Laws 
and Regulations, 1902, sec. 373), wmich read as follows: 

All postages, box rents, and other receipts at post offices shall be accounted 
for as part of the postal revenues ; and each postmaster shall be charged with 
and held accountable for any part of the same accruing in his office, which he 
has neglected to collect, the same as if he had collected it. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 19 

That the department at that time, as well as now, held the post- 
master to strict accountability for compliance with this statute is 
shown by a note following section 318, page 1036, of the January, 
1905, Postal Guide, which is as follows: 

Note. — Postmasters are reminded that under the law (sec. 373, Postal Laws 
and Regulations) they are liable on their official bonds for loss of revenue due to 
faulty administration or neglect. 

Not only this, but the postmaster was under the duty and obliga- 
tion imposed by paragraph 6 of section 456 of the Postal Laws and 
Regulations of 1902, which is as follows : 

The mailing by a publisher, as sample copies, of a larger number of copies 
than actually subscribed for in order to maintain a given circulation, or the 
continuous mailing of sample copies in excess of one hundred per centum of the 
number issued to regular subscribers, or of such copies continuously to the same 
persons, will be deemed evidence that the publication is primarily designed for 
advertising or free circulation, and the sample copies should be detained until 
the facts can be ascertained. The postmaster will promptly report the case to 
the Third Assistant Postmaster General. 

Surely no just complaint can lie against the Government, or against 
its agent, the postmaster at St. Louis, for the detention of the 300,721 
copies of the Woman's Farm Journal in October, 1905, for in this he 
only complied with the spirit and letter of the statute and regula- 
tions. Whatever inconvenience, loss, or injury may have been sus- 
tained by the Lewis Publishing Co. in virtue of the acts of the post- 
master at St. Louis in this respect is due to the neglect of the com- 
pany jn its noncompliance with the lawful demands of the post- 
master respecting the payment of postage on the copies of its pub- 
lication which it offered for transmission through the mails. 

The post-office inspectors and the postmaster at St. Louis, in in- 
vestigating the office of publication of the Lewis Publishing Co., 
exercised due diligence in prosecuting their inquiries as to the number 
of copies of the Woman's Magazine and the Woman's Farm Journal 
which the company was actually entitled to mail, based upon its 
mailing lists as then found, under the construction of the statute 
already given, and while it is not claimed that the figures given as 
the result of that investigation are absolutely correct in every par- 
ticular, except as to the copies actually admitted to the mails by the 
postmaster, there being numerous and various considerations to in- 
fluence the condition of such mailing lists, nevertheless the investi- 
gation revealed the fact that in October, 1905, the publisher of the 
Woman's Magazine and of the Woman's Farm Journal was entitled 
to mail 530.901 copies of the former for that month as to subscribers 
and an equal number as sample copies, and 141,328 copies of the 
latter as to subscribers and an equal number as sample copies. While 
the actual subscription lists of these publications during the suc- 
ceeding months would naturally vary, sometimes going above these 
figures and sometimes below, yet, taking the actual bona fide mail- 
ing list for October, 1905, as a basis, we may determine with reason- 
able accuracy the excess mailings of the publications for several 
months thereafter. This determination was made by the postmaster 
and the inspectors, their figures becoming the basis of demands for 
postage as well as the grounds of allegations of postage due in sev- 
eral civil suits instituted by the United States against the Lewis 



20 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

Publishing Co. for the recovery of unpaid postage. According to 
these figures, and as alleged in the several complaints referred to, 
the mailings of the issues of the Woman's Magazine were as fol- 
lows: For the month of October, 1905, 559,685 copies, upon which 
the postage at the transient second-class rate was $5,596.85, and the 
postage actually paid by the defendant was $1,155.57 ; for the month 
of November, 1905, 589,249 copies, upon which the postage due at 
the transient second-class rate was $5,892.49, and upon which was 
paid the sum of $1,325.60; for the month of December, 1905, 727,488 
copies, upon which the postage due at the transient second-class rate 
was $7,274.88, and upon which was paid the sum of $1,136.82; for 
the month of January, 1906, 622,792 copies, upon which the postage 
due at the transient second-class rate was $6,227.92, and the postage 
actually paid was $1,400.60; for the month of February, 1906, 
574,712 copies, upon which the postage due at the transient second- 
class rate was $5,747.12, while the postage actuallv paid at the pound 
rate was $1,293.77; for the month of March, 1906, 649,458 copies, 
upon which the postage due at the transient second-class rate was 
$6,494.58, upon which there was actually paid the sum of $1,080.58, 
leaving an aggregate due at that time of the sum of $29,840.90. 

During the same period the Lewis Publishing Co. mailed copies of 
The Woman's Farm Journal in excess of the number authorized by 
law and regulations as follows: For the month of October, 1905, 
366,740 copies, upon which the postage at the transient second-class 
rate was $3,667.40, and the postage actually paid was $733.30; in the 
month of November, 1905, 298,138 copies, upon which the postage 
due at the transient second-class rate was $2,981.38, upon which was 
paid the sum of $670.49 ; for the month of December, 1905. 324,328 
copies, upon which the postage due at the transient second-class rate 
was $3,248.28, and upon which was paid the sum of $540.37; for the 
month of January, 1906, 315,023 copies, upon which the postage due 
at the transient second-class rate was $3,150.23, while the postage 
actually paid was $520.33 ; for the month of February, 1906, 299,805 
copies, upon which the postage due at the transient second-class rate 
was $2,998.05, while the postage actually paid was $675.04; for the 
month of March, 1906, 306,632 copies, upon which the postage due at 
the transient second-class rate was $3,066.32, and upon which there 
was actually paid the sum of $684.75; making an aggregate accru- 
ing postage of $15,287.38. 

The excess mailings of The Woman's Magazine and The Woman's 
Farm Journal, over and above the mailings to legitimate subscribers 
and an equal number as sample copies, during the months of April, 
May, June, and July, 1906, continued at a marvelously heavy rate, 
the publisher being required to deposit from time to time the differ- 
ence between the pound rate and the third-class rate on such mail- 
ings pending a final determination of liability. Early in the month 
of August, 1906, the publishers were required, in lieu of making 
monthly deposits to cover the third-class rate of postage on excess 
mailings, to give bond in the sum of $50,000, and a little later an- 
other in the sum of $20,000, for the payment of all postage finally 
decided to be due over and above that collected at the cent-a-pound 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 21 

rate. The deposits during the months of April, May, June, and 
July, 1906, amounting to the sum of $29,500, were afterwards cov- 
ered into the postal treasury, and a refund of this amount has since 
been demanded by the publishers, the request being refused, pend- 
ing final issue of 'the civil suits between the United States and the 
Lewis Publishing Co. in the United States circuit court at St. 
Louis, Mo. 

Three separate examinations of the books of the Lewis Publish- 
ing Co. were made, one by the post-office inspectors and the post- 
master at St. Louis, another by a so-called citizens' committee of St. 
Louis at the instance of the Lewis Publishing Co., and a third by 
the special agents of the Third Assistant Postmaster General, and 
while the results were not identical in the several instances, different 
modes of investigation being used and different rules of deduction 
being followed, yet the substantial results were the same, all tending 
to show that the company was mailing tremendously large numbers 
of each of the publications named in excess of their legitimate sub- 
scription lists and their allowance in the mailing of sample copies, 
evidently for the purpose of establishing a given circulation for 
advertising purposes in the exploitation of the business schemes of 
the Lewis Publishing Co. and advertisers in its publications. 

On the question of nominal rates, which constituted one of the 
grounds upon which the publications were finally denied the second- 
class Mail privilege, it would seem that the charge was unquestion- 
ably established and the position well taken when it was ascertained 
that the publisher mailed a total of 1,455,215 copies of the Woman's 
Magazine in October, 1905, with a regular subscription list of but 
576.802, the subscription price being 10 cents per annum, and assum- 
ing that the full subscription price was received, but $57,680.20 could 
have been realized, an average of 3.9 cents per copy annually, man- 
ifestly a circulation at nominal rates. It was shown in December, 

1905. that the company had for the year then ending mailed a 
monthly average of 1.482,355 copies of The Woman's Magazine, for 
which it had received by way of subscriptions the sum of $50,100.04, 
postage being paid to the amount of $36,000, leaving a net balance 
of approximately $14,000, or an average of nine-tenths of 1 cent per 
copy per annum. It takes neither analysis nor reasoning to con- 
vince the average mind that this could have been nothing short of 
circulation at the lowest imaginable nominal rate. 

Of the three investigations of the subscription books of the Lewis 
Publishing Co. previously referred to, the one which Mr. Madden, 
then Third Assistant Postmaster General, deemed most reliable was 
that made by the special agents of his bureau. No reflection is in- 
tended upon the investigation made either by this corps of officials, 
or that made by the inspectors, nor yet upon that made by the so- 
called citizens' committee. But it is disclosed by the report made 
by the special agents, Mr. Madden admitting the truth of the state- 
ment, that during the seven months from October, 1905, to April, 

1906, inclusive, the following copies were mailed in excess of those 
which the company was entitled to mail, making a total of 2,146,728 
copies, an average of 306,675 per month in excess of those that went 



22 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



to subscribers or as sample copies, upon which item alone the Govern- 
ment lost postage to the amount of $21,467.28 : 





Copies. 


Issue. 


Number 
mailed. 


Number 
entitled 

to be 
mailed. 


Excess. 


October, 1905 


852,034 
986,588 
1,127,898 
1,182,854 
1,176,921 
1,138,868 
1,184,291 


775, 434 
762,296 
778,971 
774,355 
784,304 
806,728 
820,638 


76,600 


November, 1905 


224, 292 


December, 1905 


348,927 


January, 1906 


408, 499 


February, 1906 


392,617 


March, 1906 


332,140 


April, 1906 


363,653 






Total 


2,146,728 


Total average monthly 






306,675 











Postage at 1 cent per copy, 121,467.28. 



EXPIRED SUBSCRIPTIONS. 

In a previous part of this letter " a legitimate subscription list " 
to a newspaper or other periodical publication, as contemplated by 
the act of March 3, 1879, has been described and defined under the 
departmental construction of that statute, as embodied in the several 
circulars of information and published regulations, and also the limi- 
tations placed upon the number of sample copies permitted to be 
mailed by such publishers for the purpose of inducing subscriptions, 
agencies, and advertisements. The time of expiration of such sub- 
scriptions, in relation to second-class postage rates, will next be con- 
sidered. 

At the time of the origin of the dispute as to postage due on excess 
mailings of The Woman's Magazine and The Woman's Farm Jour- 
nal between the Post Office Department and the Lewis Publishing 
Co. there was no promulgated regulation fixing a definite time after 
which subscriptions would be held to be illegal under the provisions 
of the statute. Upon the supposition that a subscriber to a publica- 
tion, whose desires and purposes had been met by its quality and 
character, would wish to continue the relation of subscriber a brief 
period after the expiration of the time actually paid for as a sub- 
scriber, or definitely contracted for on trust, would be given to the 
publisher in which to ascertain whether such subscriber desired to 
continue as a subscriber to the publication. From the nature of the 
case, considering the great variety of publications and the different 
ends which they were designed to meet, such time would vary under 
different circumstances. While the relation between subscriber and 
publisher is a contractual one, and in the absence of other qualifi- 
cations or limitations would be presumed to stand upon a common- 
law understanding of contract, which would terminate the sub- 
scription relation between subscriber and publisher at the expira- 
tion of the time expressed or implied by its terms, the short and 
indefinite extension is considered as a period of grace or allowance 
for readjustment or reentry into a former relation, the conditions 
of which are supposed to be of a nature consistent with its continu- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



23 



ance. The legal conception of the contract for subscription entered 
into between publisher and subscriber is to the effect that the publi- 
cation shall be supplied by the former and received by the latter 
during the period, either definitely expressed or clearly implied, 
in th° verbal or written contract constituting the act of subscription. 
In the case of the publications of the Lewis Publishing Co., The 
Woman's Magazine and The Woman's Farm Journal, monthly pub- 
lications, were being published and furnished to the public at the 
low price of 10 cents per year. E. G. Lewis, the president of the 
Lewis Publishing Co., in a hearing before the Third Assistant Post- 
master General on the 30th day of April and 1st day of May, 1906, 
being examined on the question of expired subscriptions, said that it 
was his policy and his rule to eliminate such subscriptions after the 
expiration of the time paid for unless there was an actual and ex- 
pressed renewal. Notwithstanding this statement, it was found by 
the inspectors, upon their examination of his business, that persons 
were being carried on the mailing lists of The Woman's Magazine 
and The Woman's Farm Journal who were in arrears for 6 months, 
9 months, 12 months, and even a much greater period. But, while 
this was the case, Mr. Lewis was all the time contending that such 
subscriptions ended with the actual contractual period of subscrip- 
tion, or within practically one month thereafter. In support of which 
the following notices, appearing in his publications at the time of the 
investigation by the post-office inspectors, were carried from time 
to time : 

Discontinuances : Subscribers wishing The Woman's Magazine stopped at the 
expiration of their subscription need not notify us to that effect ; we shall con- 
sider it their wish to have it discontinued if they do not renew promptly when 
notified that the time paid for has expired. 

If you find this paragraph marked, it means that your time is out and that 
we will stop sending the magazine if not renewed within 30 days. We don't 
want to lose you, so please renew at once. If your paper comes in a blue 
wrapper, it is also a notice to you that your subscription has expired. 

Discontinuances : Subscribers wishing The Woman's Magazine discontinued 
need not notify us to that effect; we shall consider it their wish if they do not 
renew after having been notified that the time paid for has expired. 

If you find this paragraph marked, it means that your advance payment is out 
and that we will stop sending the magazine if not renewed. We don't want 
to lose you, so please renew at once. If your paper comes in a blue wrapper, 
it is also a notice to you that your paid-in-advance time has expired. 

The following table shows the number of expirations carried at 
the different dates named : 

SUBSCRIPTIONS. 



Date. 



Current. 


Expira- 
tions. 


576,802 
581,707 
603,477 
577,771 
559,812 
529,717 
527,891 


198,632 
187,589 
175,494 
196,584 
224,492 
277,011 
292,747 



Total. 



October. 1905... 
November, 1905 
December, 1905. 
January, 1906. . . 
February. 1906. 

March, 1906 

April, 1906 



775,434 
762,296 
778,971 
774,355 
784,304 
806,728 
820,638 



24 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

PROCEEDINGS AND CORRESPONDENCE. 

It is impossible to give a clear idea of the relations of the Post 
Office Department with the Lewis Publishing Co. relative to the two 
publications, the Woman's Magazine and the Woman's Farm Journal, 
between June, 1905, and March, 1907, without considering in full 
the correspondence between the Postmaster General and the Third 
Assistant Postmaster General during the pendency of the contro- 
versy. After a brief summary of these several proceedings and cor- 
respondence, their full text will be inserted herein in the sequence in 
which they occurred. 

On June 5, 1905, the Lewis Publishing Co. was cited to appear 
before the Third Assistant Postmaster General, at the Post Office 
Department in the city of Washington, to show cause why the certifi- 
cate of authorization to the second-class of mail matter, previously 
accorded to the two publications before mentioned, should not be 
withdrawn for the following reasons : 

That this publication comes within the following prohibition of the statute : 
"Provided, however, That nothing herein contained shall be so construed as 
to admit to the second-class rate regular publications designed primarily for 
advertising purposes, or for free circulation, or for circulation at nominal 
rates," in that, first, it is primarily designed for advertising purposes; second, 
it is primarily designed to advertise the other businesses in which the stockhold- 
ers and officers of the publishing company, and especially E. G. Lewis, are inter- 
ested ; third, it is primarily designed for free circulation or for circulation at 
nominal rates. 

After the hearing Mr. Madden set forth his views of the case in 
an extended memorandum to the Postmaster General under date of 
July 8, 1905, in which sundry and divers reasons were set forth why 
the certificate of authorization should not be withdrawn, the entire 
communication having the appearance and character of an attempt to 
justify nonaction by hairsplitting refinements and illogical deduc- 
tions. That this is true a casual glance at the memorandum in ques- 
tion will convince even the most credulous. 

Soon after this date the attention of the Third Assistant Postmas- 
ter General was occupied with matters in connection with the Con- 
gressional Postal Commission appointed by Congress in the latter 
part of the year 1906. On the 14th day of April, 1906, the Postmas- 
ter General directed the Third Assistant Postmaster General to 
accord to the Lewis Publishing Co. a hearing as required by the act of 
March 3, 1901, for the purpose of ascertaining two facts, to wit, first, 
whether the publications were entitled to the second-class mail privi- 
lege; and, second, whether they had the legitimate subscription list 
required by law. 

The date of this hearing was set for April 30 and May 1, 1906, and 
was accordingly held. Instead of proceeding to determine both 
questions, as he had been directed to do, and to take testimony tend- 
ing to establish the contentions of the department in relation to the 
question of the right to the second-class mail privilege, and also as 
to the legitimacy of the list of subscribers to the publications, Mr. 
Madden, on his own authority and without the knowledge of the 
Postmaster General, proceeded to waive the taking of testimony on 
the main question which he had been directed to determine — that is, 
whether the publications were entitled to the benefit of the cheap 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 25 

postage rates — and held the hearing upon one question only — that 
of the condition of the publisher's subscription lists. 

For one reason or another Mr. Madden declined to pass upon the 
questions involved, continuing them from time to time for reasons 
doubtless satisfactory to himself, until the matter dragged along into 
the year 1907. 

On the 12th day of February, 1907, the Postmaster General called 
the attention of Mr. Madden sharply to the fact that there should 
be no further delay in the full consideration and final determina- 
tion of the questions before him involving publications of the class 
to which the Woman's Magazine and the Woman's Farm Journal 
belonged; and, furthermore, that the delay in such action permitted 
by him in the consideration of such cases had been only permitted 
because of the connection of the Third Assistant Postmaster Gen- 
eral with the Postal Commission of 1906 ; and, his duties in connection 
with the work of the commission being then concluded, he should 
address himself to that purpose as directed under the instructions 
given some time theretofore in relation to such publications, includ- 
ing the Woman's Magazine and the Woman's Farm Journal. 

However, before the receipt of these instructions the Third Assist- 
ant, on the 7th day of February, 1907, after having been repeatedly 
urged by the Postmaster General, rendered his decision on the one 
question only, to wit, the condition of the subscription list, promis- 
ing that the second section of his memorandum of report would con- 
tain a determination of the main question, although at the only hear- 
ing which he had held he had specifically waived the taking of all 
testimony on that question. 

The Postmaster General declined to accept as final the decision 
and findings of the Third Assistant Postmaster General, and in a 
letter dated February 13, 1907, set forth his grounds of nonconcur- 
rence therein. To this Mr. Madden made a reply on the 2d day of 
March, 1907, only two days before the time set for the retirement 
of the Postmaster General, he being apprised of the date of such 
retirement. To this the Postmaster General replied on the 4th of 
March in a communication severely censuring the Third Assistant 
for this long delay and for the inconsistencies in his findings, and 
on the 4th day of March proceeded to take the case in his own hands 
and to exclude the publications on the threefold grounds that they 
had not a legitimate subscription list, that they were primarily de- 
signed for advertising purposes, and for free circulation. 



In proof that the Post Office Department had neither design nor 
purpose, other than the enforcement of the law and regulations, in 
denying to the Woman's Magazine and the Woman's Farm Journal 
the second-class mail privilege, it should be noted that at the earliest 
date at which the publisher corrected the illegal conditions in rela- 
tion to the subscription lists, and brought them into conformity with 
the statute and the regulations thereunder, they were immediately 
readmitted to that privilege. On the 17th day of December, 1907, 
the Woman's Magazine was readmitted, effective from September 
24, 1907, upon the basis of a subscription list of 343,341. Some idea 
of the abnormal, irregular, and unlawful condition of the subscrip- 



26 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

tion list of this publication under former conditions may be obtained 
by contrasting its claimed list of over a million subscribers with the 
number upon which it was readmitted, the latter representing the 
lawful subscriptions as sifted and segregated from the unlawful. 

The Woman's Farm Journal was readmitted under date of Janu- 
ary 7, 1908, on the basis of a subscription list of 100,214, with the 
understanding that the transient second-class rate of postage would 
be paid on all mailings in excess of this number. Again an illus- 
tration is afforded of the unlawful condition of the subscription list 
to this publication prior to, and at the time of, exclusion when we 
compare it with the small number contained in the " legitimate list 
of subscribers " upon which it was readmitted. 

It will thus be seen that instead of designedly injuring the Lewis 
Publishing Co. by denying or excluding its publications from the 
second-class mail privilege, the Post Office Department gave to it 
every right to which it was entitled under the law and regulations, 
and also did all that could be done within its province to extend to 
the publisher all the benefits of the statute to which it was entitled, 
and that any loss of that privilege on its part was due, not to mal- 
administration on the part of the Post Office Department, but to 
neglect, indifference, and nonconformity to the law on the part of 
the publisher. 

LEWIS PUBLISHING CO. V. WYMAN. 

The above- entitled cause was decided on appeal by the United 
States circuit court of appeals for the eighth circuit on August 20, 
1910, and involves two of the most important phases of the contro- 
versy between the Post Office Department and the Lewis Publishing 
Co., and is a judicial affirmation of the two strongest positions main- 
tained by the department, to wit, the power to limit the number of 
sample copies publishers may send at the cent-a-pound postage rate, 
and the right to demand the rate of postage for " others than pub- 
lishers or news agents " on excess mailings above legitimate sub- 
scriptions and an equal number as samples. 

Upon the denial by the Postmaster General, on March 4, 1907, of 
the application of the Woman's Magazine to the second-class mail 
privilege, the Lewis Publishing Co. filed a bill of complaint in the 
United States circuit court for the eastern district of Missouri and 
made application for a permanent injunction enjoining the post- 
master at St. Louis from refusing .to accept the Woman's Magazine 
as mail matter of the second class and also asking general relief, 
the foundation of the suit being the alleged withdrawal from the 
publication of the cent-a-pound rate without a hearing, as provided 
by the act of Congress approved March 3, 1901, and the claim that 
the publication was entitled generally to that rate. 

The circuit court, Judge Jacob Trieber sitting, denied the injunc- 
tion and dismissed the bill without prejudice, the relief sought other 
than the injunction being grantable, if grantable at all, by a court of 
law and not by a court of equity. From this opinion the complain- 
ant appealed to the circuit court of appeals of the eighth circuit, 
the case being decided August 20, 1910. But pending the decision 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 27 

the publication was readmitted to the mails as second-class matter, 
rendering the question of the right of the publisher to a hearing arid 
the legality of the denial by the Postmaster General, mere abstract 
or moot questions, which the court, in pursuance of well-established 
precedent, refused to decide, except as to the two points already 
named, wherein the publisher claimed that, although its publication 
had now been readmitted to the mails, nevertheless it' had been de- 
nied a part of its rights under the statute in that it had been limited 
in the number of sample copies of its publication permitted to be 
mailed at the pound rate and had been required to pay on mailings in 
excess of this limitation and on excess mailings to subscribers the 
rate of 1 cent for each 4 ounces or fraction thereof, whereupon 
the court proceeded to determine these questions as follows, the 
opinion being rendered by Circuit Judge Hook : 

SAMPLE COPY LIMITATION. 

Complaint is made, however, that the right finally accorded complainant is 
not all it was entitled to under the law. In admitting the publication to entry 
at the second-class -rate the department limited the sample copies that might be 
so transmitted through the mails to a number equal to that of the legitimate 
subscribers. It is contended that when a publisher has once been accorded the 
second-class privilege there is, as long as he retains it, no limit to the number 
of sample copies he can send through the mails at the pound rate. This con- 
tention is based on the language of the act of March 3, 1SS5, which prescribes 
a postage rate of 1 cent per pound or fraction thereof for publication's of the 
second class, "including sample copies." (Act Mar. 3. 1885, ch. 342, 23 Stat, 
387 ;'U. S. Comp. Stat., 1901, p. 2669.) The act does not specifically place a 
limit on the number of sample copies, and it is claimed the department can 
therefore impose none. The words "including sample copies" were also in 
act March 3, 1ST9 (ch. ISO, sec. 11, 20 Stat., 359). We think that under the 
authority conferred by Congress (Rev. Stat., sec. 161; U. S. Comp. Stat., 1901. 
p. 80) upon the head of the department to prescribe regulations not incon- 
sistent with law for the performance of its business, the Postmaster General 
may lawfully impose such limitation. The act of Congress does not purport 
to grant an unlimited privilege as to sample copies, and its very generality 
and indefiniteness invites a supplementary regulation. It is not necessary to 
the validity of a departmental regulation that specific statutory authority for 
it be discovered. It would be impracticable to set forth in the statutes all 
the rules for the conduct of the business of the great executive departments of 
the Government, and Congress has wisely confined itself to marking general 
outlines and imposing general limitations, leaving the subordinate and supple- 
mental details suggested by practical experience to be prescribed by the heads 
of the departments. A departmental regulation must not be inconsistent with 
the statutes, but it may be by way of execution or supplement. 

There is another consideration which bears upon the limitation of the number 
of sample copies that may be mailed at the second-class pound rate. Section 
14 of the act of March 3, 1879. excludes from the second-class rate " regular 
publications designed primarily for advertising purposes, or for free circulation, 
or for circulation at nominal rates." In the sense of the statute " primarily " 
means " chiefly or principally." The second-class pound rate of postage was 
intended for newspapers and periodicals published for the dissemination of in- 
formation of a public character, or devoted to literature, the sciences, arts, or 
some special industry, and circulated for the most part among bona fide sub- 
scribers and not for publications designed principally for advertising pur- 
poses or for free circulation or circulation at nominal rates. Obviously the 
number of copies distributed gratuitously has a direct bearing upon the primary 
or chief design of the publication, whether really for subscribers at a sub- 
stantial or compensatory price, or, on the other hand, at a nominal price and 
for advertising purposes. 



28 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

TRANSIENT SECOND-CLASS POSTAGE. 

It is also contended that, though a general postal regulation has been pre- 
scribed making an excess of sample copies evidence that the publication is pri- 
marily designed for advertising, etc., there is none authorizing the imposition of 
a higher postage rate on such excess while the entry as second-class matter 
remains in force, unrevoked. We think, however, the authority denied by com- 
plainant is deducible from sections 436 and 456 of the Postal Laws and Regula- 
tions of 1902. (See also, sec. 338, Postal Guide, Dec. 1, 1905, p. 1041, and^Cir. 
25, at p. 1045.) 

The full text of this opinion is hereto attached, marked "Ex- 
hibit H." 

CORRESPONDENCE BETWEEN THE POSTMASTER GENERAL AND THE 
THIRD ASSISTANT POSTMASTER GENERAL. 

CITATIONS IN CASES OF THE WOMAN'S MAGAZINE AND THE WOMAN 's 

FARM JOURNAL. 

[Form 3577.] 

Post Office Depaetment, 
Third Assistant Postmaster General, 

Division of Classification, 

Washington, June 5, 1905. 
Publisher of The Woman's Magazine, 

St. Louis, Mo. 
Sir: You are hereby notified that, in accordance with the act of Congress, 
approved March 3, 1901 (ch. 851, 31 Stat. L., 1107), you will be granted a hear- 
ing at the office of the Third Assistant Postmaster General, Washington, D. C, at 
2 p. m. on Saturday, June 17, 1905, to show cause why the authorization of ad- 
mission of The Woman's Magazine to the second class of mail matter under the 
act of March 3, 1879 (ch. 180, sec. 14, 1 Supp., 246), should not be revoked, and 
why the third-class rate of postage should not be charged for the transmission 
of that publication in the mails, upon the following grounds: That this publi- 
cation comes within the following prohibition of the statute: 

" Provided, however, That nothing herein contained shall be so construed as 
to admit to the second-class rate regular publications designed primarily for 
advertising purposes, or for free circulation, or for circulation at nominal 
rates," 

in that first, it is primarily designed for advertising purposes ; second, it is pri- 
marily designed to advertise the other businesses in which the stockholders and 
officers of the publishing company, and especially E. G. Lewis, are interested; 
third, it is primarily designed for free circulation or for circulation at nominal 
rates. 

Your answer, in writing, must be submitted on or before Saturday, June 17, 
1905. 

Should you desire to avoid the expense and trouble incident to a trip to 
Washington, your written answer will be given the same full and painstaking 
consideration as though you appeared in person or by representative. 
Respectfully, 

Edwin C. Madden, 
Third Assistant Postmaster General. 



[Form 3577.] 

Post Office Department, 
Third Assistant Postmaster General, 

Division of Classification, 

Washingon, June 5, 1905. 
Publisher of Woman's Farm Journal, 

St. Louis, Mo. 
Sir: You are hereby notified that, in accordance with the act of Congress 
approved March 3, 1901 (ch. 851, 31 Stat. L., 1107), you will be granted a hear- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 29 

ing at the office of the Third Assistant Postmaster General, Washington, D. C, 
at 2.30 p. m., on Saturday, June 17, 1905. to show cause why the authorization 
of admission of Woman's Farm Journal, to the second class of mail matter 
under the act of March 3, 1S79 (ch. 180, sec. 14, 1 Supp., 240), should not be 
revoked, and why the third-class rate of postage should not be charged for the 
transmission of that publication in the mails, upon the following grounds : 
That this publication comes within the following prohibition of the statute: 

" Provided, however, That nothing herein contained shall be so construed as to 
admit to the second-class rate regular publications designed primarily for 
advertising purposes, or for free circulation, or for circulation at nominal rates," 

in that, first, it is primarily designed for advertising purposes; second, it is 
primarily designed to advertise the other businesses in which the stockholders 
and officers of the publishing company, and. especially E. G. Lewis, are inter- 
ested : third, it is primarily designed for free circulation or for circulation at 
nominal rates. 

Your answer, in writing, must be submitted on- or before Saturday, June 17, 
1905. 

Should you desire to avoid the expense and trouble incident to a trip to 
Washington, your written answer will be given the same full and painstaking 
consideration as though you appeared in person or by representative. 
Respectfully, 

Edwin C. Madden, 
Third Assistant Postmaster General. 

THIRD ASSISTANT POSTMASTER GENERAL'S LETTER OF JULY 8, 19 05, IN 
WHICH ALLEGED REASONS ARE SET FORTH FOR FAILURE TO PROCEED 
FURTHER WITH THE CASES. 

[Memorandum for the Postmaster General.] 

Case: Woman's Magazine (C. D. No. 26,575) and Woman's Farm 
Journal (C. D. No. 58,208), published at St. Louis, Mo., by the Lewis 
Publishing Co. Post-office inspector's No. 52,856-C. 

Note. — Owing to the manner of proceeding in these cases it is deemed best 
to submit the whole matter, with findings, views, and recommendations to the 
Postmaster General for final action. 

The publications referred to by way of comparison throughout this memo- 
randum, with the exception of The Evening Star, are those brought into the 
case by the publisher himself. 

I. The circumstances under which the cases arise. 

Post Office Inspectors Wm. T. Sullivan and J. L. Stice, rendered a report on 
May 17, 1905, to Inspector in Charge Robert M. Fulton, at St. Louis, on the 
cases of the Woman's Magazine and Woman's Farm Journal, in relation to the 
right of those publications to transmission in the mails at the second-class rates. 
This report was examined, approved, and forwarded to the chief post office 
inspector by Inspector in Charge Fulton. The report, which is lengthy and also 
accompanied by a number of exhibits, indicates a very painstaking examination 
into the features of the business of publishing these periodicals, and I assume 
that it is accurate as to those matters reported upon. The gravamen of the 
report is found in the following passages : 

" We have given most of our attention to the question as to whether or not 
these publications are not primarily intended for advertising purposes and 
whether the subscription rate is not ' nominal ' within the meaning of the 
Postal Laws and Regulations of lf)02. If the operating expense is $700,000 per 
annum and the revenue from subscriptions only $85,000 per annum, then it is 
circulated at less than cost, although this is denied by the publisher. We 
undertake to show that the rate is nominal, because it is furnished at less than 
cost, and that while it may have a value of 10 cents a year as a literary pro- 
duction, yet it is and has been conducted primarily for advertising purposes 
and as an aid in a scheme to defraud. The case must therefore be considered 
on broader grounds than usual, because of these complications. If the operat- 
ing expense is $700,000 per annum and the subscription receipts but $85,000 
per annum, then there can be no question but that the advertising revenue of 
$800,000 per annum becomes the principal business, no matter what the original 



30 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

purpose ©f the publication was, and according to paragraph 3, section 437, 
Postal Laws and Regulations of 1902, and the construction therein placed on 
the word ' primarily,' these publications are not entitled to the second-class 
privilege. Section 428, Postal Laws and Regulations of 1902, provides that the 
publication shall not be entered if published for circulation at nominal rates. 
The construction placed on the word ' nominal ' brings these publications within 
the inhibition of the regulations, and for the reason that the publications could 
not be circulated at all at the present rate without being primarily intended for 
advertising purposes. 

" Section 437, Postal Laws and Regulations of 1902, provides that publications 
owned and controlled by one or several individuals or business concerns and 
conducted as auxiliary and essentially for the advancement of the main busi- 
ness or calling of those who control or own them, are primarily designed for 
advertising purposes. ' Primarily ' is held to mean principally, not incidentally. 
We have already shown that the advertising revenue is nearly 10 times the sub- 
scription revenue, hence it follows that the subscription is incidental and nominal 
and the advertising the principal object." (From pages 5 and 6 of report.) 
******* 

" In addition to the evidence already presented it becomes necessary to intro- 
duce the connection between the Lewis Publishing Co. and the other business 
concerns which are owned and controlled by the officers of said company and 
which we propose to show have been organized and promoted by E. G. Lewis 
through the medium of these two publications under consideration. These 
publications being conducted in fact as auxiliaries to the main business of 
Lewis, Kramer and Cabot, and therefore primarily designed for advertising pur- 
poses." (From page 6 of report.) 

Before proceeding further it is especially important to understand that the 
question of fraud and the question of postage rates have no relation to each 
other. Each must be decided independently of the other upon the facts re- 
spectively relevant. 

The question of fraud order relates solely to the fraudulent intent of an 
individual in respect of his dealings with the public through the mails, and it 
is wholly immaterial what class of mail matter he employs to accomplish his 
purpose. It may be by letters, circulars, or advertisements in daily papers or 
the monthly magazines. The substantial effect of such an order is to prevent 
the delivery of any mail to the person involved. It does not prevent him from 
continuing to send matter in the mails. 

The question whether a periodical is or is not entitled to the second class, 
on the contrary, is one depending simply upon the compliance of the publica- 
tion itself with certain tests or standards established by law. When printed 
matter (as all publications must be) is determined not to be entitled to the 
second-class rates, the effect of such determination is merely to relegate it to 
the third class. Denial of the second-class rates does not exclude a publica- 
tion from the mails and has no effect upon the publisher's right to receive any 
mail matter. It affects only the right of the publication to be accepted and 
forwarded as matter of that class. 

In determining the right to a particular postage rate nothing is material ex- 
cept the facts tending to show compliance with the standards of classification. 
The conduct of the sender in other particulars, however important as throwing 
light upon his right to receive letters in the mails, is of no importance in de- 
termining whether his outgoing mail matter is to be classified as belonging to 
one class or another. In determining whether a publication is designed pri- 
marily for advertising purposes it is immaterial whether the subject advertised 
is itself a scheme to defraud or whether it is legitimate and honorable. If 
the design to advertise is primary, no matter how innocent or legitimate the 
thing or things advertised, the publication is debarred, while if the design to 
advertise is not primary, no matter how fraudulent or illegitimate the thing 
or things advertised, the publication is not debarred. It is, therefore, of no 
relevance upon the question of classification that these publications are charged 
to be " aids in a scheme to defraud." 

These cases, therefore, so far as my jurisdiction extends, must be decided upon 
the evidence indicating the primary design of the publications themselves. 

II. The questions to be decided. 

The questions before me are reduced to an inquiry as to whether the 
Woman's Magazine and Woman's Farm Journal are designed primarily for 
advertising purposes — and this is of a twofold nature — and as to whether the 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 31 

subscription rate at which they are sold to the public is prohibited by law; 
that is to say : 

1. Whether these publications are designed primarily for advertising pur- 
poses in general. 

2. Whether they are designed primarily for advertising purposes in par- 
ticular ; that is to say, whether they are designed primarily to advertise cer- 
tain other businesses in which the shareholders are interested. 

3. Whether they are circulated at nominal rates. 

1. Advertising purposes in general. — The Woman's Magazine was formerly 
known as The Winner. Under the latter name it was admitted to the 
second-class rates of postage in October, 1899. The title was changed to the 
Woman's Magazine in September, 1902. The publication remained the same. 
Under the regulations the change of name required a new entry to be granted 
as a matter of form. At that time the department had been enjoined by the 
courts from ruling out of the second class a number of publications belonging 
to the same general class. It was therefore impossible to refuse this entry. 
but at the same time it was deemed advisable not to grant it in a formal man- 
ner. The application was left pending, the publication continuing to be mailed 
in the same manner as before the change of name. 

The Woman's Farm Journal was admitted to the second class in December, 
1891, and has so continued up to the present time. 

Both of these publications belong to what is commonly called the " mail- 
order " type ; that is to say, they are largely used as advertising media by 
persons who sell goods by means of orders received through the mails. Pub- 
lications employed for advertising of this nature do not necessarily constitute 
publications " designed primarily for advertising purposes." As a matter of 
fact, the advertising in the recognized magazines is largely in aid of mail- 
order businesses of various kinds. Everybody's Magazine, Ladies' Home Jour- 
nal, Collier's Weekly, etc., are commonly known to the advertising world as mail- 
order publications. 

There is a class of publications of the mail-order type, however, which the 
department has determined to be within the prohibition of the statute against 
publications "designed primarily for advertising purposes"; but that deter- 
mination is not dependent upon their being mail-order publications, but upon 
a number of facts, the legitimate inference from which is that advertising is 
their primary design. Among the facts which are always considered by this 
bureau in determining this question are : 

(a) The character and volume of the whole circulation of the publication, 
the legitimacy and extent of the list of subscribers, which includes an inquiry 
as to whether alleged subscribers are carried upon a pretended credit for an 
indefinite period ; whether the names listed represent actual subscribers at all ; 
and whether the sample-copy privilege is abused. 

(b) The character of the price charged — that is to say, whether it is free, 
nominal, or otherwise, and the collateral inquiry whether a price apparently 
real is rendered nominal or free by the return of equivalent value in the form 
of premium, reward, or the like. 

(c) The characteristics of the publication itself with respect to the relative 
space devoted to advertising, the nature of the text in respect of its being a mere 
cover or mask for the advertising, and facts of a similar nature to be gleaned 
from a critical examination of the publication itself. This, of course, does not 
mean a censorship of the literary matter, but the mere determination in point 
of fact whether the dissemination of news or literary matter is the primary 
purpose. 

Such have been the inquiries which, since the beginning of this reform, have 
been carried on in every case where it was necessary to determine the mixed 
question of law and fact as to whether any particular publication was designed 
primarily for advertising purposes. Without due consideration of all of these 
elements it is impossible to properly determine this question and thus enforce 
the law. 

In dealing with this phase of the case the inspectors' report takes an alto- 
gether different ground. The recommendation that the publications be denied 
the second-class privilege is based upon two propositions: 

(a) That the rate is nominal because the publication "is furnished at less 
than cost, and that while it may have a value of 10 cents a year as a literary 
production, yet it is and has been conducted primarily for advertising purposes 
and as an aid in a scheme to defraud." In other words, although the price and 
the value are commensurate, the rate is nominal because the publication is 
conducted primarily for advertising purposes. 



32 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

(6) That inasmuch as the operating expense is $700,000 per annum and the 
subscription receipts but $85,000 per annum, " there can be no question but 
that the advertising revenue of $800,000 per annum becomes the principal busi- 
ness," and hence the publication is designed primarily for advertising purposes. 
In other words, the more the revenue from advertising is devoted to the main- 
tenance and development of the publication, the clearer the design to conduct 
the paper for advertising purposes. 

This reasoning would exclude practically every daily newspaper and every 
magazine from the second class. There is hardly a newspaper or periodical of 
the higher class in which the annual cost of production is not greatly in excess 
of the revenue from subscriptions alone. The magnificent service of the modern 
newspaper and the quality of the popular magazine are based fundamentally on 
the fact that their advertising revenue enables them to do for the subscriber 
what the subscriber's money alone would not enable them to do. 

As an illustration, apply the rule invoked by the inspectors in these cases 
to The Evening Star of this city. Accepting the published statements with 
regard to circulation as well as to prices charged for advertising, a rough esti- 
mate shows that the receipts from the sales of copies of the paper for one year 
are approximately $197,000, while the receipts from advertising patronage are 
approximately $630,000. If the Woman's Magazine be held to be primarily 
designed for advertising purposes because of the disproportion between the 
advertising and subscription revenue, by parity of reasoning The Evening Star 
must be similarly dealt with. 

A critical examination of the issues of the Woman's Magazine and Woman's 
Farm Journal shows that the space devoted to advertising as compared with the 
space devoted to reading matter is not greater on the average than that in the 
recognized periodicals. For example, the Woman's Magazine for June, 1905, 
contains 24 pages, of which 13 are reading matter and 11 are advertising. The 
same magazine for July, 1905, contains 20 pages, of which 13f are reading 
matter and 6| are advertising. Harper's Magazine for June, 1905, contains 327 
pages, of which 162 are reading matter and 165 are advertising. The Woman's 
Farm Journal for March, 1905, contains 32 pages, of which 12 are reading 
matter and 20 are advertising. Scribner's for the same month contains 277 
pages, of which 133 are reading matter and 144 are advertising. The Woman's 
Farm Journal for April, 1905, contains 32 pages, of which 15 are reading matter 
and 17 are advertising. McClure's Magazine for May, 1905, contains 299 pages, 
of which 112 are reading matter and 177 are advertising. 

It will be seen from the foregoing comparison that the total amount of ad- 
vertising carried in the publications in question is not, on the whole, greater in 
proportion than that carried by Harper's, McClure's, and Scribner's. Compare 
the June number (1905) of the Woman's Magazine with the Ladies' Home 
Journal for the same month. The former contains 43 columns, or 7,441 agate 
lines, of advertising, as against 95 columns, or 19,080 agate lines, in the latter. 
The Ladies' Home Journal being approximately twice the size of the Woman's 
Magazine, there is no substantial difference in the relative amount of advertis- 
ing in the two. 

With respect to the text being a mere cover for the advertising, it would ap- 
pear that the reading matter, although not of the highest literary merit, is pre- 
pared specially for these publications, and the publisher insists that it is edited 
with care. It consists chiefly of fiction in the form of short stories which, so 
far as is known, are not clipped or reprinted; special articles similar to those 
found in Sunday newspapers ; pages devoted to fancy work, fashions, and house- 
hold hints, recipes, etc. In the absence of any evidence indicating that the sub- 
scribers do not subscribe for the paper on its merits, no test of the subscription 
list for that purpose having been instituted, it is practically impossible to say 
that the reading matter is intended merely as a mask for the advertising. 

That the Woman's Magazine is a leading medium for mail-order advertising 
is shown by the fact that, in the following list, composed by the Rowell Adver- 
tising Agency and purporting to name the best six mail-order publications in 
the country, it is found third : Everybody's Magazine, Ladies' Home Journal, 
Woman's Magazine. Saturday Evening Post, McClure's Magazine, Collier's 
Weekly. (See Printers' Ink, Feb. 1, 1905, p. 34.) 

2. Special advertising purposes. — The second ground of complaint against 
these publications is that they are designed primarily to advertise the other 
businesses in which the stockholders and officers of the Lewis Publishing Co., 
and especially E. G. Lewis, are interested. In other words, that they fall within 
the general class of " house organ." 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 33 

In approaching this inquiry it is necessary to bear in mind the principle which 
has heretofore been regarded as controlling, and which is well illustrated by 
the opinion of the Assistant Attorney General for this department, rendered on 
June 29. 1881. In the case then under consideration it appeared that the pro- 
prietors of the paper were interested as proprietors of a business largely adver- 
tised in its columns, and that three-fourths of the number of copies printed 
were sent out free to the recipients. Upon these facts the Assistant Attorney 
General proceeded to render his opinion as follows: 

"As already remarked, while the fact that the publishers are the proprietors 
of a business extensively advertised in said publication would not, if standing 
alone, affix to the paper the character of an advertising sheet, yet when that 
fact is taken in connection with the further consideration that three-fourths of 
the issue is for free circulation, I think the conclusion inevitable that the paper 
is not entitled to the pound rates." (1 Op., Asst. Attys. Genl. P. O. Dept., 
p. 627). 

It appears that at one time or another since these papers have been pub- 
lished by E. G. Lewis, the president of the Lewis Publishing Co., he has been 
personally interested in the following concerns, each of which has been adver- 
tised in his magazines: University Heights Realty & Investment Co., World's 
Fair Contest Co., Development & Investment Co., United States Fiber Stopper 
Co., California Vineyards Co., Camp Lewis, People's United States Bank. 

With respect to the University Heights Realty & Investment Co., it appears 
from an inspection of the magazines that it has been advertised in each of them 
but once — in the Woman's Magazine for December, 1902, and in the Woman's 
Farm Journal fpr February, 1903. It may, therefore, be excluded from consid- 
eration. 

The World's Fair Contest Co. seems to have been interested in one of those 
guessing contests which were finally determined to be contrary to the law, in 
the opinion of the Attorney General of November 28, 1904. Under that opinion 
the scheme was permitted to operate to a conclusion. It was extensively adver- 
tised in the Woman's Magazine from September, 1902, to October, 1904, receiv- 
ing, in addition to the regular advertising space, two short reading notices and 
an editorial. It was regularly advertised in the Woman's Farm Journal from 
February, 1903, to October, 1904. 

The Development & Investment Co. was advertised in the Woman's Magazine 
with more or less regularity from September, 1902, to January, 1904, since 
which time it has not been advertised. The advertisement of the same com- 
pany in the Woman's Farm Journal was discontinued in December, 1903. Ex- 
cept for reading notices appearing in September, October, and November, 1902, 
this company does not seem to have had an extensive advertising in either 
magazine. / 

The United States Fiber Stopper Co. was advertised regularly in both maga- 
zines from February to August, 1903, several of the issues containing full-page 
advertisements. 

The California Vineyards Co. was one in which, according to the inspector's 
report, Mr. Lewis was interested as a bondholder. It was advertised with more 
or less regularity in both magazines from November, 1903, to August, 1904, 
some of the issues containing full-page advertisements. 

" Camp Lewis " appears to have been a camp in connection with the Louisiana 
Purchase Exposition for the accommodation of patrons of the Lewis Publishing 
Co. who might visit the fair. It was not conducted as a money-making enter- 
prise, and its further consideration is not material to this inquiry. " Camp 
Lewis " was obviously designed to advertise these publications, instead of the 
publications being designed to advertise it. 

From January, 1904, to May, 1905, the People's United States Bank appears 
to have been extensively advertised in the Woman's Magazine and from Janu- 
ary. 1904. to April. 1905. in the Woman's Farm Journal. It received in eaCh 
magazine for several months considerable advertising in the form of a reading 
notice. That practice, however, seems to have been discontinued. Its con- 
tinuance would have raised a strong presumption against the papers, but that 
presumption can not be said to exist at the present time. 

In connection with the foregoing advertising Mr. E. G. Lewis, president and 
manager of the Lewis Publishing Co., makes oath, under date of June 22, 1905, 
as follows : 

" That all advertising, of every sort whatever, which has appeared in the 
columns of these two publications, since owned by the Lewis Publishing Co., has 

86534°— 11 3 



34 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

been charged for and paid for at the regular advertising rate, irrespective of 
whether any officer or stockholder of the Lewis Publishing Co. has been inter- 
ested, directly or indirectly, therein. This of course excepts such losses from 
bad debts and such accounts outstanding for advertising as are a regular part 
of the business." 

Taking all of the advertising now in these publications in aid not only of 
the enterprises mentioned, but of all those in which the numerous stockholders 
of the Lewis Publishing Co. are interested, so far as ascertained, it appears 
that for the months of June and July, 1905, the proportion of such advertising 
to the whole space in the Woman's Magazine was 12.5 per cent and 11.2 per 
cent, respectively. Taking Harper's Magazine for June, 1905, as a standard 
of comparison, we find that the advertising of the publisher's other business in 
that number amounted to 9.1 per cent. In this comparison it should be borne 
in mind that the house advertising in the case of Harper's does not include 
any advertising of concerns in which the individual shareholders of the pub- 
lishing company may be interested, no information having been secured on this 
point. If we compare the amount of the publisher's advertising with the whole 
amount of advertising, we find that in the Woman's Magazine of June and July, 
1905, the proportion was respectively 27.2 per cent and 35.3 per cent. In this 
estimate is included, as above, the advertising of such well-known advertisers 
as the Sterling Remedy Co., manufacturers of Cascarets, of which H. L. 
Kramer, first vice president of the Lewis Publishing Co., is treasurer and gen- 
eral manager; also of the Brown Shoe Co., of St. Louis, the vice president of 
which, J. H. Roblee, is a shareholder to the extent of $1,000 in the Lewis Pub- 
lishing Co. If these collateral advertisers were excluded in this calculation, the 
percentage would be very much less. The same thing is true in the case of 
the Woman's Farm Journal, in the March and April, 1905, issues, of which the 
proportion of the publisher's advertising to the whole amount of advertising 
was 13.7 per cent and 26.4 per cent, respectively. 

Although we have no such data in respect of other papers with which com- 
parison can be made, we find that in Lippincott's Magazine for May, 1905, the 
percentage of the publisher's own advertising to the whole amount of advertis- 
ing was 31.9. 

3. Circulation at nominal rates. — The grounds upon which the inspectors base 
their conclusions that both of these publications are sold at nominal rates are 
not tenable. The department did, in the beginning of the reform, undertake 
to ascertain in certain cases the amount of revenue from subscriptions and the 
amount from advertising patronage, with a view to using such information as 
an aid in determining the right of a publication to the second class. However, 
this sort of evidence was not made use of, because it was found to be wholly 
immaterial in law whether the revenue from subscriptions paid for the entire 
maintenance of the paper or not. If a publication has a " legitimate list of 
subscribers " and if its rate is neither free nor nominal, the proportion of reve- 
nue from subscriptions and advertising is of no value as evidence against the 
publication. So far as the record discloses, every subscriber upon the lists of 
the Woman's Magazine and Woman's Farm Journal is an " actual " subscriber. 
The publisher so states upon oath, and the test of the subscription usually 
made by this office is 1 eking. It must be taken for granted, then, that the 
subscription lists are legitimate. Neither does it appear that the subscription 
price in any instance is returned in the form of a premium or gift. To exclude 
the publication on the sole ground of a 10-cent rate being " nominal " would be 
to put a rigid construction upon that term which has never yet been applied. 
What is a " nominal rate " remains to-day an unsettled question ; and in all 
other cases involving the question of primary advertising design it has been 
found possible to reach a determination without placing the ground of decision 
upon the perilous question of " nominal rate." The importance of avoiding a 
hard and fast rule on this point will be apparent when we consider that many 
of the great dailies throughout the country are sold at a less price per copy than 
the Woman's Magazine and Woman's Farm Journal. For illustration, one of 
the great western dailies is aold for $1 a year, which is three copies for a cent, 
while the Woman's Magazine and Woman's Farm Journal (monthly publica- 
tions) are sold at 10 cents a year, or approximately 1 cent a copy. Whatever 
value the provision in the law as to a nominal rate may have had in the begin- 
ning — and I find no precedent indicating that it was ever usefully applied — it 
is obviously of but little value under modern conditions when improved ma- 
chinery, the cheapened cost of paper, and other results of modern competition, 
and the universal reliance upon advertising revenue enable practically all 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 35 

newspapers and periodicals to circulate at rates which would once have been 
regarded as nominal and below which it is hardly i>ossible to fall. 

III. Conclusions of the Third Assistant Postmaster General. 

Upon the foregoing state of facts alone, without an analysis of the circu- 
lation and without evidence as to whether the claimed list of subscribers is, as 
a in.-! iter of fact, legitimate in its entirety, as required by law, and the other col- 
lateral aids in determining what is the primary design of the publications, I 
do not feel warranted in holding that the Woman's Magazine or the Woman's 
Farm Journal, as distinguished from publications of the same general class, is 
primarily designed for advertising purposes in general, or to specially advertise 
the other businesses of the publishing company. 

Had the facts with regard to the matters just mentioned been developed by 
proper inquiry, it is possible that, taken in connection with what I have already 
recited as to the advertising features, they might have caused a different con- 
clusion. 

If you direct it, an investigation along the usual lines pursued by this bureau 
can be carried forward in respect of these publications; but in my judgment 
such a course can best be followed later, when the determination of the depart- 
ment in the cases of some other mail-order publications which are far clearer 
and more flagrant, and which are now before the courts, has received judicial 
approval. , 

IV. Recommendation as to present action. 

In view, then, of the fact that these are not clear cases, and that the reform, 
if it is to be carried on, must be carried on by establishing our contentions in 
cases where they are palpably correct, I recommend that these cases be closed 
by a letter from the Third Assistant Postmaster General to the postmaster at 
St Louis, substantially as follows: 

" You are informed, and you will so advise the publisher of the Woman's 
Magazine and Woman's Farm Journal, that in view of the pending litigation, 
wherein publications of apparently the same general class are involved, and in 
view of the long continuance of those publications in the second class, and the 
fact that the department is not prepared to deal with the class as a whole at 
the present time, it has been determined to authorize you to continue to accept 
both publications as matter of the second class until the questions are settled 
and a definite rule for dealing with all such cases can be formulated and pub- 
lished, or until you are further advised in these two individual cases. Nothing 
in this decision is to be construed as approving the right of these two publica- 
tions to the second-class rates or as guaranteeing a continuance of their accept- 
ance in the mails at those rates should it be determined in future that they 
are not so entitled." 

I have come to the foregoing conclusion without giving any consideration or 
weight to the statements of the publisher : 

First. That if the space devoted to advertising in general in either publica- 
tion be too great he will, on notice, immediately reduce it to meet any rule 
which the department may promulgate. 

Second. That if the space devoted to advertising the other businesses of the 
publishing company be too great he will, on notice to that effect, promptly re- 
duce it. or eliminate it altogether, according to any rule made by the department. 

Third. That so far as a nominal rate is concerned his publications are cheap 
because they are for the common people who can not afford to pay for the 
higher priced magazines ; but that if the price be too low he will, immediately 
upon notice from the department, raise it to any acceptable figure. 

Fourth. That no advertising is accepted in these publications without careful 
scrutiny as to its moral tendency, and that the publisher guarantees to make 
good the actual loss any subscriber sustains from being swindled by any adver- 
tiser in these publications. 

In closing, I deem it proper to call attention to the seriousness of the function 
performed by the Third Assistant Postmaster General, acting on behalf of the 
Postmaster General, in relation to these questions of classification. Since it is 
utterly impracticable for the Postmaster General to sit in judgment upon each 
case as it arises, the decision of the Third Assistant Postmaster General must 
be final in most cases. Such decisions affect one of the most extensive indus- 
tries in the country, and should be sound in morals as well as in law. Other- 



36 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

wise they may bring destruction to legitimate business enterprises and dis- 
credit upon the postal service. It is therefore important that the Third Assist- 
ant Postmaster General should reach a judgment only after careful considera- 
tion of the evidence which experience has shown to be relevant and material. 
Especially should he do so without haste or bias and uninfluenced by any pre- 
conceived notion. 

The foregoing memorandum and the evidence upon which it is based have 
been reviewed by Mr. Henry H. Glassie, special counsel of the department in 
litigation in relation to this class of cases. He concurs in the findings and 
r ecommenda tions. 

Respectfully submitted. 

Edwin C. Madden, 
Third Assistant Postmaster General. 

July 8, 1905. 

POSTMASTER GENERAL^ ORDER OF APRIL 14, 1906, DIRECTING INVESTIGA- 
TION OF THE WOMAN'S MAGAZINE AND THE WOMAN'S FARM JOURNAL 
FOR THE DETERMINATION OF THE CONDITION OF THEIR SUBSCRIPTION 
LISTS, AND ALSO WHETHER THEY ARE ENTITLED TO THE SECOND-CLASS 
MAIL PRIVILEGE. 

April 14, 1906. 
Sib : The letter of E. G. Lewis and the accompanying statement of the Lewis 
Publishing Co., both of which are dated April 7 and inclosed herewith, have 
been transmitted to the Post Office Department by Hon. Jesse Overstreet, 
Member of Congress, to whom they are addressed. 

It will be seen that in his letter Mr. Lewis complains that the postmaster at 
St. Louis has required the Lewis Publishing Co. to deposit with him an amount 
sufficient to cover the postage on copies of its publication entitled " Woman's 
Farm Journal," which he believes to have been mailed in excess of the number 
legally mailable at the pound rate, and, as president of that company, asks to 
be accorded a hearing upon the issue raised by the action of the postmaster. 

You will please immediately institute an investigation for the purpose of 
determining whether the Woman's Farm Journal and the Woman's Magazine, 
issued by the Lewis Publishing Co., are entitled to second-class privileges, and 
if so, what number of copies of each publication should be admitted to the mails 
monthly at the rate of 1 cent per pound. This investigation should be thorough 
and comprehensive, and in pursuance of it the company should be afforded 
early opportunity to be fully heard upon the questions involved. 
Very respectfully, 

Geo. B. Cortelyou, 
Postmaster General. 
Hon. E. C. Madden, 

Third Assistant Postmaster General. 

POSTMASTER GENERAL'S LETTER OF FEBRUARY 12, 1907, DIRECTING THE 
THIRD ASSISTANT POSTMASTER GENERAL TO PROCEED TO DETERMINATION 
OF THE CASES. 

February 12, 1907. 

Sir : Upon the statement by you last summer that your duties in connection 
with the preparation of the data for the Postal Commission, and the fact that 
such a commission had been authorized by Congress, would make it imprac- 
ticable for you to take up and consider as in the usual course certain cases 
involving alleged abuses of the second-class mailing privilege, I approved of a 
postponement of action in such cases until the commission had made its report. 
Included among the cases of which the consideration was thus postponed were 
those involving certain stock journals passing in the mails as second-class pub- 
lications, and which, in your opinion, were probably abusing seriously the 
privilege accorded to them. 

As the report of the Postal Commission has now been made and submitted to 
Congress, it is my desire that all cases involving alleged abuses of the second- 
das mailing privilege be taken up by your office as promptly as possible and 
considered, and that thtre be no hesitancy about excluding from the mails as 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 37 

second-class matter all such publications as are found to be abusing that 
privilege in such manner as to violate the law, and to subject the Post Office 
Department to losses of revenue. Each of these cases should be dealt with 
upon the ascertained facts and without reference to any other consideration 
than whether the methods and practices pursued are not violative of law, and 
there is not resting upon the Post Office Department the duty of excluding the 
publication from the second class of mail matter. 

Respectfully, yours, Geo. B. Cortelyou, 

Postmaster General. 
Hon. Edwin C. Madden, 

Third Assistant Postmaster General. 

MEMORANDUM OF THE THIRD ASSISTANT POSTMASTER GENERAL OF FEB- 
RUARY 7, 1907, HOLDING, IN EFFECT, THAT THE SUBSCRIPTION LISTS 
OF THE WOMAN'S MAGAZINE AND THE WOMAN'S FARM JOURNAL ARE 
CORRECT, AND THAT THE LEWIS PUBLISHING CO. IS ENTITLED TO THE 
SECOND-CLASS MAIL PRIVILEGE. 

February 7, 1907. 

Report of the Third Assistant Postmaster General to the Postmaster 
General on the case of the Woman's Magazine and the Woman's Farm 
Journal, published by the Lewis Publishing Co., of St. Louis, Mo. 

Note. — The report on this case consists of three sections, Nos. I, II, and III. 

Section I. Decision of the Third Assistant Postmaster General as to whether or not, 
as a matter of fact, the mailings of the publications in question were in excess of the 
number which the publisher was entitled to mail of the issues between October, 1905, 
and April and May, 1906, as to subscribers and sample copies at the rate of 1 cent a 
pound. 

Section II. Decision of the Third Assistant Postmaster General as to whether or not 
the publications are entitled to continue in the second class of mail matter. 

Section III. Important matters and observations concerning the questions involved in, 
and the developments incident to. the case, which are highly important to be considered 
as affecting not only the particular publications, but the whole postal service. 

Section I. 

Dear Sir: Under date of April 14, 1906, you sent me the following instruc- 
tions : 

" The letter of E. G. Lewis and the accompanying statement of the Lewis 
Publishing Co., both of which are dated April 7 and inclosed herewith, have 
been transmitted to the Post Office Department by Hon. Jesse Overstreet, Mem- 
ber of Congress, to whom they are addressed. 

" It will be seen that in his letter Mr. Lewis complains that the postmaster 
at St. Louis has required the Lewis Publishing Co. to deposit with him an 
amount sufficient to cover the postage on copies of its publication entitled 
' Woman's Farm Journal.' which he believes to have been mailed in excess of 
the number legally mailable at the pound rate, and as president of that com- 
pany asks to be accorded a hearing upon the issue raised by the action of the 
postmaster. 

" You will please immediately institute an investigation for the purpose of 
determining whether the Woman's Farm Journal and the Woman's Magazine, 
issued by the Lewis Publishing Co., are entitled to second-class privileges, and 
if so, what number of copies of each publication should be admitted to the 
mails monthly at the rate of 1 cent per pound. This investigation should be 
thorough and comprehensive, and in pursuance of it the company should be 
afforded an early opportunity to be fully heard upon the question involved." 

Under instructions which you later sent me the investigation was extended 
back to cover the October, 1905, issues of both publications, and was brought 
down to cover the May, 1906, issue of The Woman's Magazine and the April. 
1906, issue of the Woman's Farm Journal. 

The law on the case is as follows : 

" Mailable matter of the second class shall embrace all newspapers and other 
periodical publications which are issued at stated intervals and as frequently 
as four times a year, and are within the conditions named in sections twelve 
and fourteen. (Sec. 427. P. L. & R.) 



38 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 



"The conditions upon which a publication shall be admitted to the second 
class are as follows : 

" First. It must regularly be issued at stated intervals, as frequently as four 
times a year, and bear a date of issue, and be numbered consecutively. 

" Second. It must be issued from a known office of publication. 

" Third. It must be formed of printed paper sheets, without board, cloth, 
leather, or other substantial binding, such as distinguish printed books for 
preservation from periodical publications. 

" Fourth. It must be originated and published for the dissemination of in- 
formation of a public character, or devoted to literature, the sciences, arts, or 
some special industry, and having a legitimate list of subscribers: Provided, 
however, That nothing herein contained shall be so construed as to admit to 
the second-class rate regular publications designed primarily for advertising 
purposes, or for free circulation, or for circulation at nominal rates. (Sec. 
428, P. L. & R.) 

" When any publication has been accorded second-class mail privileges, the 
same shall not be suspended or annulled until a hearing shall have been 
granted to the parties interested. (Sec. 444, P. L. & R.) 

"All publications of the second class, except as provided in section 25 of 
said act (of March 3, 1879, ch. 180, 1 Supp., 249), when sent by the publisher 
thereof and from the office of publication, including sample copies, or when 
sent from a news agency to actual subscribers thereto, or to other news agents, 
shall * * * be entitled to transmission through the mails at one cent a 
pound or fraction thereof, such postage to be prepaid as now provided by law. 
(Sec. 448, P. L. & P.) 

" The rate of postage on newspaper and periodical publications of the second 
class, when sent by others than the publisher or news agent, shall be one cent 
for each four ounces or fractional part thereof, and shall be fully prepaid by 
postage stamps affixed to said matter. (Sec. 455, P. L. & R.)" 

The ruling of the postmaster from which the publisher, through Hon. Jesse 
Overstreet, appealed was made under the following ruling of the Third As- 
sistant Postmaster General : 

" If sample copies in excess of the number * * * (one hundred per cent 
on the subscription list) be presented for mailing, they are not entitled to the 
pound rate of postage. They are chargeable with the transient second-class 
rate of one cent for each four ounces or fraction thereof, to be prepaid with 
stamps affixed on each separately addressed copy or package of unaddressed 
copies." 

The facts as disclosed by an investigation conducted by this bureau, treating 
each publication separately, are as follows : 

THE WOMAN'S MAGAZINE. 

The total mailings of this publication by the month are found to be as 

follows : 



Issues. 


Copies. 


Subscribers. 


Samples. 


Total. 


October, 1905 


852, 034 
986, 588 
1, 127, 898 
1, 182, 854 
1,176,921 
1,138,868 
1,184,291 


603, 181 
531,676 
345, 690 
317,818 
312,439 
360, 426 
292, 296 


1,455,215 




1,518,264 




1,473,588 


January, 19CG 

February, 1906 


1,500,672 
1,489,360 


March, 1906 . 


1,489,294 


April, 1906. . . 


1,476,587 







The foregoing is. of course, an estimate. It would be next to the impossible 
to tell exactly the number of copies mailed, since it is true that a variation of 
one-tenth of an ounce in the weight per copy, due to variation in the trimming 
of the margin, variation in the weight of paper, dampness of the paper, or 
weight of wrappers, will increase or decrease the number of copies per pound 
so that the total number mailed of any issue may vary 50,000 copies in the 
estimate. The estimate is based upon all the data which could be secured 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 39 

and which would furnish the most reliable basis for the calculations. The 
number of pounds mailed was ascertained from the receipts issued to the 
publisher by the postmaster, which receipts are required to show the number 
of pounds sent to subscribers, the number of pounds sent as samples, and the 
total pounds mailed. 

For the purposes of this report (Section I) it is immaterial and unnecessary 
to consider whether or not more copies were printed than were mailed. The 
question is simply one of fact : Did the publisher under the ruling quoted on 
page 3 mail at the pound rate more copies of either publication than he was 
entitled to mail, and if so, to what extent did he exceed his privilege? 

That there are subscribers to the publication there is no doubt. The question 
depends entirely upon the number of subscribers ; that is to say, in order to 
decide as to whether there was or was not an excess mailing at the pound rate, 
it is necessary to find whether the persons whose names and addresses appear 
on the publisher's list as subscribers are such as a matter of fact, and the 
whole number of them, the publisher under the ruling being entitled to mail 
an equal number of copies at the pound rate as samples. 

The question of whether the persons on the list are subscribers can not be 
decided upon the methods of the publisher in securing their subscriptions, but 
the result of the methods may be used in finding whether or not the persons 
whose names and addresses were found on the list are in fact actual sub- 
scribers: that is to say, the question of whether or not such persons are in 
truth subscribers turns not upon the matter of how they subscribed, or how 
they were secured, but is one of fact — did they subscribe? 

Consideration must be given to the circumstance that this publication is sold 
at a very low rate, and naturally the publisher could not afford a too expensive 
system in the securing, classifying, handling, and accounting methods. The 
publisher stated at the hearing before this office substantially that he had 
sought to observe every known rule and limitation of the Post Office Depart- 
ment in the conduct of his business, and if it were found that any practice or 
method of his was in conflict with the rules he would immediately amend 
the same, for he stood ready to meet all requirements as soon as he could find 
out what those requirements were. 

It was necessary for the commission (the organization, work, and findings 
of the commission are dealt with in Section III) which investigated the list 
and classified the various orders in one way and another, to bring each class 
to attention, with a view of deciding as to whether or not, under the rules, it, 
as a class, should or should not be counted. Many individual subscriptions 
were found, and some classes of subscriptions were found, the proper status of 
which was difficult to determine. Where the actual and indisputable documen- 
tary evidence of subscription could not be found, or where the documentary 
evidence itself was in doubt, tests were instituted with a view to finding, not 
whether each individual name carried on the list should or should not be 
counted — because that would have been an almost interminable task, would 
have involved more work and time than have already been expended on the 
case, and would have been reprehensibly wasteful of the department's energies — 
but whether, as a general thing, the claims of the publisher were substantiated 
by the statements of the subscribers themselves, or other evidence, as the case 
might be. 

Numerous tests were made. They were conducted under the usual rules and 
practices of the department in dealing with like questions in other cases, the 
object being to be entirely fair and impartial, both to the publisher and the 
department. No special rule was made, and in no instance is the publisher given 
the benefit of any doubt, except where the same consideration would be shown 
any other publisher in a similar situation. The report of the commission and 
the voluminous exhibits accompanying it show the exactness and closeness of 
scrutiny in the work as a whole. The result of every test is favorable to the 
publisher, and where inquiries were addressed to the subscribers themselves, 
the replies favored him to an average of about 90 per cent or over. 

As a result, it was found that under no rule of the department so far applied 
to any other publisher or publication, could any exception be taken to the great 
bulk of the subscribers on the list. There are, however, two features of the 
subscription list to be considered by themselves in order to settle as to their 
allowance or disallowance, as the case may be. They are the "expirations" 
and the " paid-for-by-others " — third parties. There are also a number of classes 
of alleged subscriptions, each small in itself, which are objectionable. The 
action taken on them will appear later. 



40 



RELIEF OE THE LEWIS PUBLISHING COMPANY. 



The actual count of subscription orders, tested and substantiated as stated, 
including those expired, is as follows : 

SUBSCRIPTIONS. 



Date. 


Current. 


Expirations. 


Total. 


October, 1905 


576,802 
581,707 
603,477 
577,771 
559,812 
529, 717 
527,891 


198,632 
187,589 
175,494 
196,584 
224, 492 
277,011 
292, 747 


775,434 


November, 1905 


762, 296 


December, 1905 


778,971 


January, 1906 


774,355 


February, 1906 


784,304 


March, 1906 


806, 728 


April, 1906 


820,638 







The publisher stated at the hearing before this office, April 30 and May 1, 
1906, that in the case of the Woman's Magazine he carried expired subscriptions 
on his list six months with the expectation of securing renewals. At the end 
of that time, if not renewed, the names were eliminated. The investigation 
disclosed that some of the subscriptions were carried six and two-fifths months, 
and in many instances as long as eight months, due to the methods employed. 
It appeared that the expired subscriptions due, under the rules of the publisher, 
to be eliminated at the end of six months, were not, in the course of business, 
reached until some portions of them had been carried as long as eight months. 

The totals given in the foregoing table, it will be seen, do not agree with 
the estimates made from the pounds mailed as shown by the receipts issued 
by the postmaster. They are considerably less in each case ; but at every mail- 
ing covered by the investigation the list of current subscriptions fairly allow- 
able under the rules, excluding expirations (credits), was more than the num- 
ber of sample copies mailed, with but two exceptions — that of the October, 
1905, issue and that of the May, 1906, issue. The current subscriptions for 
those issues, excluding expirations, were, for October, 1905, 576,802, while it 
appears from the estimate made from the postmaster's record of weight that 
603,181 sample copies of that issue were mailed ; and for the May, 1906, issue, 
527,891 current subscriptions were found, while the estimate of the mailing of 
sample copies is 547,701. Therefore, except for those issues, the question of 
whether the publisher exceeded his privilege to mail copies at the pound rate 
is easily and clearly disposed of. Whether or not there were excess mailings 
with the issues of October, 1905, and May, 1906, turns upon the question of 
whether the so-called " expirations " are allowable. If allowable, the publisher 
is more than safely within his privilege. Indeed, he might have mailed many 
thousands more. 

EXPIRED (CREDIT) SUBSCRIPTIONS. 

The number of subscriptions to the Woman's Magazine carried regularly for 
a period of about six months after expiration averaged approximately about 
one-third of the whole claimed list from the October, 1905, to the May, 1906, 
issues, both inclusive. In other words, from about 200,000 to nearly 300,000 
names and addresses were carried on the list during that period from month 
to month in the hope or expectation of securing renewals. The carrying of an 
expired subscription is substantially the extension of credit to the subscriber. 
There is no law which requires a subscription to be paid in advance. Probably 
no publisher is, and certainly very few are, without expired subscriptions upon 
their lists. The only rule on expired subscriptions is that published in Circular 
XXV. It is as follows : 

" Expired subscriptions may be carried When necessary for a sufficient time 
to enable the publisher to ascertain whether it is the intention to renew. After 
the expiration of such reasonable time they will not longer be recognized as 
actual subscriptions, and in all cases the ratio of expired subscriptions to the 
whole list, irrespective of the time carried, will be considered and given weight 
in determining the legitimacy of lists of subscribers and the primary design of 
the publication." 

This rule will not serve for the case in hand. It goes to the list as a whole 
and to the primary design of the publication, and can not be applied to excess 
mailings. It is, however, applicable to the case as treated in Section II. 

No satisfactory basis for a calculation as to what percentage of the expired 
subscriptions were actually renewed was found. If renewals were made after 
the expiration of a period of eight months (some were carried even longer), the 
original evidence of subscription had by that time been destroyed and the 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 41 

renewals were counted as original subscriptions are counted. It turns out, 
then, that a person who had subscribed for one year, and who had not renewed 
at the end of the year, would be carried for six months, and possibly eight 
months, on the publisher's books as a subscriber. If he renewed within that 
time, his subscription was dated back to begin at the expiration of the old one. 
If at the end of six or eight mouths he had failed to renew, six or eight copies, 
as the case might be, over and above what he actually subscribed for would 
have been sent him free. If he had renewed after eight months, which appears 
to have been true in some thousands of cases, the subscription would be 
treated as new, no charge being made for the copies over and above the num- 
ber due him on the previous subscription. This might happen over and over 
again with the same subscriber. 

There is no authority of law for holding that a subscription must be paid in 
advance, and no authority of law for holding that every subscription terminates 
at the expiration of the period for which it is written. It is upon this con- 
struction, existing since the passage of the act of March 3. 1879, that the car- 
rying of expired subscriptions is permissible. Of course, no publisher secures 
a renewal of every subscription carried as a credit after expiration. That could 
not be expected. It is, however, reasonable to expect that a publisher should 
be able to show that he does secure a fair percentage of renewals from the per- 
sons he carries. He should, indeed, be able to show that at least two out of 
every three, and certainly as many as three out of every five, actually renew. 
If such a rule had been in existence and applied to this particular case, we 
should probably rule out a great percentage of the number of subscriptions 
carried as expirations. 

So far, however, we have never had any rule at all on this subject other than 
the one quoted from Circular XXV, and it is indefinite as to proportion and 
length of time, and so far as it goes has not yet been applied in a single case. 
In the course of the reform of the abuses of the second-class privilege the 
necessity of a rule fixing definitely the proportion and the time permissible to 
carry expired subscriptions has frequently been felt, but the point has not been 
reached where it was considered wise and timely to formulate and publish one. 
The advance of the reform must not be headlong or indifferent to the equities 
of the situation. It must be by steady, well thought out, well planned and con- 
servative degrees. This expired subscription feature is only one phase of the 
great postal problem, and it is a universal practice. The reform in all of its 
aspects is a difficult and delicate task and one intensely irritating to publishers 
because of the long period of years during which the department gave substan- 
tially no attention at all to such matters of administration. The reform, of 
course, is aimed at abuses, but the rules made to reach them more or less 
affect the legitimate — that is unavoidable. 

Whatever pule may be adopted definitely fixing the limits of proportion and 
time as to credits and expirations, it is certain to shock the publishing industry 
to its very foundation, so extensive and so long established has been the prac- 
tice. Even if we had no new law in expectation, the point is not yet reached 
where it would be considered wise and tactful to make and publish such a rule. 
This will be understood better when it is known that many publishing houses 
carry expired subscriptions three or four years. The practice varies according 
to what the publisher himself deems to be in the best interests of his business, 
and when a rule definitely limiting the privilege is made it is certain to meet 
strenuous opposition, and to be regarded more or less as a curtailment of the 
publisher's rights. 

As illustrating the truth of this it is only necessary to state that a short time 
ago a false report was circulated by a publisher to the effect that the depart- 
ment was about to rule against credit and expired subscriptions. Of. course, 
there was not a grain of truth in it, but nevertheless it provoked a strong pro- 
test. But for the privilege of carrying expired subscriptions, and for a number 
of years, it is said that the county press could not exist ; and the publishers 
appearing before the meeting of the Postal Commission in New York October 
last argued that they should be permitted to carry expirations at least a year 
and a half. 

The report of the investigation shows that the income of the publisher from 
subscriptions, including renewals, was estimated for the year ending December 
31, 1905, to be $50,100.04 for the 597.730 subscriptions shown by the actual count. 
At 10 cents a year he would have received approximately 41,750 subscriptions 
per month during the year. As a matter of fact, he received an average of 
49,810 per month, taking into account the 5-cent clubs and 6-cent clubs. It is 



42 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

unnecessary for the purpose of this decision to inquire what percentage of 
the money received was for renewals. It is clear that the income from sub- 
scriptions, both new and renewals, was great enough to carry the number added 
to the list from month to month as expirations in the place of those dropped 
and renewed; but it is not clear that the income from subscriptions, both new 
and renewals, indicates a percentage of renewals great enough to warrant the 
carrying of such a proportion of expirations. The publisher undoubtedly is 
seeking new subscriptions all the time, but the actual income from new sub- 
scriptions and for renewals we do not know. 

If a definite and comprehensive rule were adopted concerning credit and ex- 
pired subscriptions it would scarcely be liberal enough to permit the publisher 
of a 10-cent magazine to carry for such a length of time so great a number as 
in this case. There is no doubt, however, that whatever rule might be adopted 
it would be broad enough to allow him to carry sufficient expirations for six 
or eight months to have made the number of subscriber's copies exceed the 
number of sample copies of the October, 1905, and May, 1906, issues. Eliminat- 
ing expirations, the publisher was safely within his rights between those issues, 
because in no case did he mail a greater number of sample copies than the 
number of copies mailed to current subscribers. 

Since there is no definite existing rule of limitation to apply to credits and 
expirations, to make a special rule for this case would be unwarranted and 
seriously criticizable, especially as to give any such rule effect it would be 
necessary to apply it ex post facto, penalizing a practice not in conflict with 
any existing rule, and this in the face of the publisher's repeated statements 
that he stands ready to meet any and all requirements or limitations of the 
department as soon as known. 

I believe the publisher of the Woman's Magazine is violating the spirit of the 
second-class privilege by carrying such a volume of expired subscriptions ; 
that it is an abuse; that it results in other abuses; that it is unfair to the 
Government; and that it is reprehensible and ought to be dealt with. But I 
am compelled in justice to state that in this regard this publisher is no worse 
than many others in his class. Indeed, it is known that his case is by no means 
as flagrant as some others. It is understood that some publications in his class 
carry expired subscriptions without any limit save the convenience of the pub- 
lisher, and with some of them the securing of a subscription once means that 
the name will never be cut off, renewal or no renewal. Once a subscriber 
always a subscriber is their rule. Then, again, some of our best publications 
carry expired subscriptions for several years. 

If existing law is to continue upon the statute books there should be a rule 
adopted and published, as soon as the situation will permit, which will apply 
thereafter uniformly to all alike, and which will fix the limit to which the 
department will tolerate the practice of carrying credit or expired subscriptions; 
and should be to the effect that no sample-copy privilege may be based on 
expired subscriptions. 

I rest on this question by stating my condemnation of the practice, and finding 
that there is no existing rule which I would be justified in applying to the ex- 
pired subscriptions in this instance, either as to the proportion carried or for 
the length of time, as a ground upon which to rest in deciding whether or not 
there has been an excess mailing at the pound rate. When a general rule is 
formulated, and due notice is given when it will take effect, this publisher, with 
others, will be required to abide by its terms, whatever they may be. 

SUBSCRIPTIONS FOR OTHERS. 

During this publisher's trouble with the postmaster at St. Louis a consider- 
able sentiment in his behalf was created throughout the country. Many people 
seemed to believe that he was being abused or ill treated, and some, as a 
measure of assistance to him, paid for copies of the Woman's Magazine to be 
sent to third persons which the publisher himself should select. Large num- 
bers of copies were sent out under this arrangement, but it was only a tem- 
porary condition and applied to only occasional issues. 

Under the rules of Circular XXV, if in force, the great bulk of the alleged 
subscriptions paid for in this way would not be acceptable at the pound rate. 
They would be subject to the transient rate of 1 cent for each 4 ounces or 
fraction. That rule, as you will recall, has been set aside in the case of the 
stock journals, which are by far the worst offenders in this regard in the 
country. Their practices are one of the worst abuses of the second-class privi- 
lege. The circumstance that we suspended this rule in the case of the stock 
journals makes it impossible in fairness to now apply the rule to the Woman's 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 43 

Magazine, especially so because in that case it was but a small fraction of the 
whole circulation to subscribers, while in the case of the stock journals it con- 
stitutes the bulk of their circulation and is the basis of their so-called " legitimate 
list of subscribers." With them the practice is permanent and continuous in 
the face of their knowledge of the department's ruling, while, so far as we 
know, this publisher is ignorant of the ruling. 

Another reason why it would be unfair to enforce this ruling in this instance 
is that recently, when the ruling was brought to judicial test in the case of 
the Iowa Homestead, and the department was sustained by the courts, we re- 
funded to the publisher the 4-ounce rate and permitted the copies paid for by 
others to be mailed at a cent a pound to the end of the publisher's contract 
with the persons interested in the circulation of the paper for business reasons. 

THE PUBLISHER AND THE PUBLICATION. 

In treating this case it was necessary for me to take great pains to be wholly 
uninfluenced by the estimates or opinions of others, or of myself, as to the 
character of the publisher himself. Whether he be good or whether he be bad 
has nothing to do with the question of the rate of postage on his periodical. 
It is all a question of law, fact, rules, and departmental practice as affecting 
the periodical itself. ■ The publisher and the publication must be treated under 
exactly the same rules as all others, and that has been done. There has been 
no stretch of any ruling to cover any question. This case, however, is unusual, 
in that so far as known never before has any publisher's business or business 
methods been subjected to such a raking scrutiny, the minutest detail having 
been examined into for the purpose of rendering a decision on this excess 
questiou. 

It is important to know that the Woman's Magazine is of the mail-order type 
of periodical, and that there is no objection in law to the mail-order publication 
as such. If the Woman's Magazine be in whole or in part an abuse of the 
second-class mailing privilege, it must in justice be said that it does not appear 
tc be as flagrant as others in its class which have come to attention, and 
which for prudential reasons the department has not undertaken to deal with, 
action having been deferred until the class can be taken up as a whole and 
uniform rules be applied to all. So far the department has not been free to 
take up and deal with this class, nor has it been equipped for such a campaign. 
It is alleged, and it is generally understood, that with this kind of periodical 
grave abuses of the second-class privilege exist ; that many of the claimed lists 
of subscribers are not legitimate as required by law ; and that in other particu- 
lars they do not comply with the law's requirements. However, they are sub- 
stantially all alike, varying only in degree in one particular or another. 
Therefore the wisdom of singling out one or two publications to be dealt with 
in advance of being ready administratively to handle the class as a whole may 
well be doubted. Certainly it is not without the most serious embarrassment 
to the operation of uniform, impartial, and efficient administration of the second- 
class mail problem. It is, of course, understood that this case did not originate 
with, and was not under the direction of, the Third Assistant Postmaster 
General until it was by your letter of April 14 transferred to him. If the post- 
master conceived the Woman's Magazine to be an abuse, in whole or in part, of 
the second-class privilege, it was his duty to report his reasons for so believing 
to the Third Assistant Postmaster General and await instructions. It was 
wrong for him to proceed on his own motion, and according to his own methods 
and judgment. 

ALLEGED SUBSCRIPTIONS REJECTED. 

The investigating commission found in the course of its work many different 
classes of subscriptions and examined into each particular class. All those se- 
cured by so-called clubbing arrangements with other publications are objec- 
tionable. The rule in Circular XXV applicable to them is as follows: 

" The publisher having fixed the price of his publication, will be regarded, 
in the absence of evidence to the contrary, as having done so in good faith and 
according to its value. Any reduction, therefore, from such advertised price 
will be carefully considered in its bearing upon the question of the primary design 
of the publication in respect of advertising and its circulation at a nominal rate. 
Wherever such reduction, by whatever means brought about, is so great that 
the publication is sold at less than half the advertised price, it will be taken as 
reducing it to a nominal rate ; and in cases where the subscription price as fixed 
by the publisher appears to be already lower than the customary or general 



44 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



market price for publications of the same class, any reduction from that price, 
by whatever means brought about, will be taken as reducing it to a nominal 
rate:' 

Under the italicised part of the foregoing rule I hold that the publisher of 
any publication sold as low as 10 cents a year is not entitled to make any re- 
duction whatever in the price to subscribers by any process whatever, directly 
or indirectly. I deem it proper to enforce such a ruling in this instance, and 
therefore reject all those subscriptions where the alleged subscribers paid less 
than the advertised price on the ground that they do not constitute actual sub- 
scriptions. This is without deciding at this time whether or not the adver- 
tised price (10 cents a year) is itself a nominal rate, but merely holding that 
any reduction from that price does effect a nominal rate or free circulation of 
the publication to that degree. In all those cases which have come up for at- 
tention the reduction made to the subscriber by persons securing subscriptions 
was without the knowledge of the publisher, but he must be held responsible 
for those who act as his agents. The action in this particular is simply that 
of refusing to receive in the mails at the pound rate copies addressed to such 
alleged subscribers. The publisher's privilege to mail copies at the pound rate 
is held to be limited to those sent to subscribers and those sent as samples; 
and these copies, if mailed at all, are subject to the transient rate, since the 
publisher in sending them is not doing so in his capacity as a publisher. 

Under this ruling subscriptions secured through the following-named persons, 
firms, and institutions are rejected : 



Name. 



Address. 



Number of 
subscrip- 
tions. 



Bohart & Co 

Brookman Manufacturing Co 

Walter L. Beals 

Dieter Co 

Farmers and Mechanics' Bank 

Gallipolis Journal 

Green's Fruit Grower 

Wm. PennHalleck 

G. M. McCracken & Son 

Martin Bank 

Midland Novelty Co 

Pine Tree State Seed Co 

Press Publishing Association , 

A. D. Porter Co 

Twentieth Century Publishing Co . 

Vick Publishing Co 

L. E. West Gum Co 

World Manufacturing Co 

Adrian Daily Telegram 

Enterprise Publishing Co 

Finley, Dicks & Co 

Michigan Farmer 

Neosho Times 

Ohio Farmer 

Richmond Times Dispatch 

Southern Tobacconist and Farmer. 

Western Sun 

Asheboro Courier 

Big Tree Publishing Co 

Smith Printing Co 

Southern Vermont Mirror 

Kansas Farmer 

Republican Publishing Co 

Vinton Leader 

News Herald 

Seattle Post Intelligencer 

Log Cabin 

Cleveland Press 

Nashville American 

Daily Drovers Telegram 

The Dispatch 

Progressive Farmer 

Seneca Kicker 

Columbus Dispatch 

Burlington Hawk Eye 

Plain Talk 

Independent 

Reliable Poultry Journal 

Gallia County News 

Gallia Times 



Clinton, Iowa 

Chicago, 111 

Middleboro, Mass 

Chicago, 111 

Bath, N. Y 

Gallipolis, Ohio 

Rochester, N. Y 

Harrisburg, 111 

Liberty, Pa 

Martin, Tenn 

Buffalo Center, Iowa. 

Bath, Me 

Detroit, Mich 

New York, N. Y 

Detroit, Mich 

Rochester, N. Y 

Rock Island, 111 

Cincinnati, Ohio 

Adrian, Mich 

Waxahatchie, Tex. . . 

New Orleans, La 

Detroit, Mich 

Neosho, Mo 

Cleveland, Ohio 

Richmond, Va 

Richmond, Va 

Vincennes, Ind 

Asheboro, N. C 

Warrensburg, 111 

Warsaw, Ind 

Danby, Vt 

Topeka, Kans 

Rushville, Ind 

Vinton, Ohio 

Cuba City, Wis 

Seattle, Wash 

Cynthiana, Ky , 

Cleveland, Ohio 

Nashville, Tenn 

Kansas City, Mo 

Lexington, N. C 

Raleigh, N. C 

Seneca, Pa 

Columbus, Ohio 

Burlington, Iowa 

Newport, Tenn 

Pomeroy, Ohio 

Quincy, 111 

Gallipolis, Ohio 

Gallipolis, Ohio 



67 

26 

22 

93 

431 

25 

588 

1,090 

50 

120 

50 

10 

138 

2,913 

51 

416 

26 

2,081 

135 

150 

500 

3,256 

23 

261 

3,472 

91 

214 

44 

100 

100 

300 

68 

78 

347 

153 

141 

41 

1,444 

324 

442 

100 

1,404 

55 

295 

150 

26 

75 

29 

100 

2,000 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 45 

CONCLUSION. 

My decision is that under no existing rule did the publisher of the Woman's 
Magazine mail at the pound rate copies in excess of his privilege at that rate 
with the issues from October, 1905, to May, 1906, both inclusive. 

The following instructions will be sent to the postmaster : 

"Postmaster, St. Louis, Mo. 

"Sir: You are infoumed that, upon a hearing accorded the publisher of the 
Woman's Magazine April 30 and May 1, 190(5, and an investigation of the sub- 
scription list of that publication and the mailings of the issues thereof from 
October, 1905, to May, 1906, both inclusive, under the usual rules governing 
the department and applicable to all publications in similar situations, no copies 
in excess of the publisher's privilege were mailed at the pound rate. You are 
therefore directed to refund to the publisher the deposits in excess of the pound 
rate held by you pending this decision. 

" In this connection you will inform the publisher that this decision is not 
to be considered as sanctioning in any particular the methods of securing sub- 
scriptions or of the subscription price or of approving the list of subscribers 
as legitimate, and that concerning the expired subscriptions especially is this 
decision not to be construed as an approval of the carrying of such a propor- 
tion for such a length of time, or of basing a sample-copy privilege on expired 
subscriptions. In these regards he is simply given the benefit of the doubt in 
the absence of a definite rule applicable alike to all publishers. 

" You will also inform the publisher that the subscriptions obtained by 
clubbing offers by persons acting as his agents — whether their practices were 
known to him or not — -where the subscription price was in any degree reduced 
to the subscriber, it is held that such subscriptions are not in fact subscrip- 
tions, and therefore may not be included in the legitimate list of subscribers 
required by law ; and that hereafter all copies mailed in fulfillment thereof 
shall be charged at the transient second-class rate prepaid by stamps affixed, 
because his privilege to mail copies at the pound rate is limited to those sent 
to subscribers and as samples. 

" The particular subscriptions rejected will be found on the accompanying 
sheet. If the publisher finds it difficult or impossible to segregate these sub- 
scriptions from his list so as to prepay them by stamps affixed, as required, 
you may, until he can accomplish the work of segregation, accept the transient 
rate on an equal number of copies to be prepaid in money, to be remitted to the 
department in canceled stamps attached to a sheet or sheets of paper, as is 
customary in such cases. Sixty days will be allowed the publisher to pay the 
postage on these copies in this manner, or so much of that time as may be 
necessary." ^ 

THE WOMAN'S FARM JOURNAL. 

The law and rulings applicable to this case are, of course, the same as in 
the case of the Woman's Magazine, and need not be repeated. That is also 
true as to the statements concerning the publisher's business methods, the 
various kinds of subscriptions, the application of the rules and practices of the 
department, and of the investigation conducted by this office. 

This case, however, differs from the other in that, without allowing the expi- 
rations to be counted as subscriptions, the publisher has greatly exceeded his 
privilege at the pound rate with the mailings of the issues from October, 1905, 
to April, 1906, inclusive. For no issue was there found to be current unexpired 
subscriptions enough to justify the mailing of such a number of sample copies 
as was mailed. The expirations are in much greater proportion to the whole 
list than in the previous case, and are carried for approximately twice the 
length of time. 

From the record of pounds mailed of the Woman's Farm Journal at the 
post office at St. Louis from October, 1905, to and including April, 1906, the 



46 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 



following estimate is obtained; and what was said concerning the estimate in 
the case of the Woman's Magazine is true in this instance : 



Issue. 


Copies. 


Subscribers. 


Samples. 


Total. 


October, 1905 


346, 445 
321,261 
370, 359 
346,830 
358,623 
328,378 
348, 191 


256,114 
274, 489 
230, 454 
245, 508 
231,336 
258, 304 
242,875 


602 559 


November, 1905 


595,750 
600, 813 


December, 1905 


January, 1906 


592 338 


February, 1906 


589 959 


March, 1906 


586, 682 
591,066 


April, 1906 





The investigation conducted in this case was exactly the same as in the case 
of the Woman's Magazine, and the report of the investigating commission as 
to the number of subscriptions found is as follows: 

SUBSCRIPTIONS. 



Issue. 


Current. 


Expirations. 


Total. 


October, 1905 


153,597 
165,134 
190,014 
189,763 
191,676 
187,911 
197,006 


145, 991 
145,690 
136,017 
134,979 
138, 464 
144, 462 
137,862 


299,588 


November, 1905 


310,824 


December, 1905 


326,031 
324, 742 


January, 1906 


February, 1906 


330, 140 


March, 1906 


332,373 
334,868 


April, 1906 





From the foregoing it will be seen that the question in this case of deter- 
mining whether the publisher mailed copies at the pound rate in excess of his 
privilege depends upon the decision to be made as to the expired subscrip- 
tions. If allowed, he is well within his privilege ; if disallowed, he has exceeded 
his privilege. 

What was said concerning expired subscriptions to the Woman's Magazine 
applies here. In this case, however, the rule of the publisher is to carry them 
for 12 months, and the investigation disclosed that in the course of business 
before elimination many are carried 14 or 16 months. As stated before, we 
have no definite rule as to the proportion or length of time expired subscrip- 
tions may be carried, and we are here in the same embarrassing situation in 
making a ruling. If this case stood alone, there would be no doubt as to the 
proper decision to make. 

According to the views of publishers in general, a year and a half is not an 
excessive time to carry expired subscriptions. However, I regard the carrying 
of such a volume of expired subscriptions and for such a length of time, espe- 
cially in such a low-priced publication, as a grave abuse, which leads to other 
abuses, and at any rate the publisher should not be allowed to base his sample- 
copy privilege on expired subscriptions, although it has never heretofore been 
held or contended that the sample-copy privilege must be based upon subscrip- 
tions not expired and could not be based as well upon those legitimately car- 
ried as expired. 

The publisher has repeatedly stated that he is ready to abide by any rule or 
limitation, once known, and that he asks only to be placed upon a level with 
others in his class. 

I am, therefore, in justness required to state that there is no ground on 
which I could decide against the expired subscriptions in this case alone, how- 
ever bad the conditions may be, until we formulate and publish a general rule 
applicable alike to all publishers in the same situation. 

ALLEGED SUBSCRIPTIONS EEJECTED. 



The investigating commission found in the course of its work many different 
classes of subscriptions and examined into each particular class. To all those 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



47 



secured by so-called clubbing arrangements with otber publications there is 
objection/ The rule in Circular XXV, applicable to them, was quoted in the 
previous case. Under the last clause therein I hold, as in the lirst instance, 
that a publisher of any publication sold as low as 10 cents a year is not entitled 
to make any reduction whatever in the price to subscribers by any process 
whatever, directly or indirectly. I deem it proper to enforce such a rule here, 
and therefore reject all those where the alleged subscriptions were paid at less 
than the advertised price on the ground that they are at a nominal rate and do 
not constitute actual subscriptions. This is without deciding at this time 
whether or not the advertised price (10 cents) is itself a nominal rate, but 
merely holding that any reduction from that price effects a nominal rate or 
free circulation to that degree. In all those cases which have come to atten- 
tion the reduction made to the subscriber by persons securing subscriptions was 
without the knowledge of the publisher; but he must be held responsible for 
those who act as his agents. The action in this instance is simply that of refus- 
ing to receive in the mails at the pound rate copies addressed to such alleged 
subscribers. The publisher's privilege to mail copies at the pound rate is held 
to be limited to those sent to subscribers and those sent as samples. Copies sent 
in fulfillment of these alleged subscriptions, if mailed at all, are subject to the 
transient rate, on the ground that the publisher in sending them is not doing so 
in his capacity as .publisher. Under this rule subscriptions received through 
the following-named persons, firms, and institutions are rejected : 



Name. 


Address. 


Number of 
subscrip- 
tions. 






407 






30 




Council Bluffs, Iowa 

Liberty, Pa 


355 


McCracken, G. M., & Son 


5 






66 






44 


World Manufacturing Co 




416 


Seneca Kicker 


Seneca, Pa 


5 






99 


Burlington Hawkeye, The 




150 


Daily Drovers Telegram 




46 






7 




do 


8 


Hearthstone (A. D. Porter Co.) 


New York, N. Y 

Detroit Mich 


237 


Michigan Farmer 


50 






167 


Richmond Times Dispatch 




14 


Southern Vermont Mirror 


Danby, Vt 


39 








CONCLUSION. 







My decision is that under no existing rule did the publisher of the Woman's 
Farm Journal mail at the pound rate copies of his publication of the issues from 
October, 1905, to April, 1906, both inclusive, in excess of his privilege. 

The following instructions will be sent to the postmaster : 

"Postmaster, St. Louis, Mo.: 

" You are informed that upon a hearing accorded the publisher of the 
Woman's Farm Journal, April 30 and May 1, 1906, and an investigation of the 
subscription list of that publication and the mailings of the issues thereof from 
October, 1905, to April, 1906, both inclusive, under the usual rules governing 
the department and applicable to all publications in similar situations, no 
copies in excess of the publisher's privileges were mailed at the pound rate. 
You are therefore directed to refund to the publisher the deposits in excess of 
the pound rate held by you pending this decision. 

" In this connection you will inform the publisher that this decision is not 
to be considered as sanctioning in any particular the methods of securing sub- 
scriptions or of the subscription price, or of approving the list of subscribers 
as legitimate, and that, concerning the expired subscriptions, especially is this 
decision not to be construed as an approval of the carrying of such a propor- 
tion for such a length of time, or of basing a sample-copy privilege on expired 
subscriptions. In these regards he is simply given the benefit of the doubt in 
the absence of a definite rule applicable alike to all publishers. 



48 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

" You will also inform the publisher that the subscriptions obtained by club- 
bing offers by persons acting as his agent — whether, their practices were known 
to him or not — where the subscription price was in any degree reduced to the 
subscriber, it is held that such subscriptions are not in fact subscriptions, and 
therefore may not be included in the legitimate list of subscribers required by 
law; and that hereafter all copies mailed in fulfillment thereof shall be charged 
at the transient second-class rate, prepaid by stamps affixed, because his privi- 
lege to mail copies at the pound rate is limited to those sent as to subscribers 
and as samples. 

" The particular subscriptions rejected will be found on the accompanying 
sheet. If the publisher finds it difficult or impossible to segregate these sub- 
scriptions from his list so as to prepay them by stamps affixed, as required, you 
may, until he can accomplish the work of segregation, accept the transient rate 
on an equal number of copies, to be prepaid in money, to be remitted to the 
department in canceled stamps, attached to a sheet or sheets of paper, as is 
customary in such cases. Sixty days will be allowed the publisher to pay the 
postage on these copies in this manner, or so much of that time as may be 
necessary." 

Respectfully submitted. 

Edwin C. Madden, 
Third Assistant Postmaster General. 
Hon. George B. Coetelyott, 

Postmaster General. 

Note 1. — The estimate of the number of expired subscriptions to the Woman's 
Farm Journal is based on their being carried 16 months, it being found in the 
course of the investigation that a considerable percentage was carried for that 
length of time. In the absence of any rule or limitation no different decision 
would be justified, even though the expirations had been carried for a still 
greater period. 

Note 2. — The figures in the table on the Woman's Farm Journal case indi- 
cate an excess mailing of about 3,000 copies of the issue of October, 1905, but 
as our figures are only estimates which might be thousands of copies out of 
the way, due to the variation in the weight per copy, and as, if the estimates 
of expirations were based on 18 instead of 16 months' credit, there would be no 
excess, it is deemed best to take no notice of the circumstance. 

Note 3. — My decision on the second question (Section II) will be handed you 
at the earliest possible moment. 

POSTMASTER GENERAL'S LETTER OF FEBRUARY 13, 1907, CRITICIZING DECISION OF THIRD 
ASSISTANT POSTMASTER GENERAL OF FEBRUARY 7 AND NONCONCURRING THEREIN. 

MEMORANDUM. 

February 13, 1907. 
The statutes governing the admission to the mails of matter of the second 
class, as included in the current edition of the Postal Laws and Regulations 
(sees. 427, 428, 444, 448, and 455), are quoted in your report in the matter 
of alleged excess mailings of the Woman's Magazine and the Woman's Farm 
Journal, published by the Lewis Publishing Co., of St. Louis, Mo. In addition 
to those sections the following regulations, issued from your office and found 
on pages 1040 and 1041 in the Official Postal Guide for January, 1905, should 
have consideration in this connnection : 

"Circular III.] 

" Post Office Department, 
" Office of the Third Assistant Postmaster General, 

" Classification Division. 
"7. Under the act of March 3, 1879, a publication, to be admissible to the 
second class of mail matter, must, in addition to complying with the other 
requirements of the law, have a ' legitimate list of subscribers.' This list of 
subscribers must be legitimate in its entirety. And the sending of copies free 
to the recipients thereof to a number in excess of the number sent to actual 
subscribers will be taken as evidence that the primary or chief purpose of the 
publication is not to meet a real demand on the part of subscribers, but to 
secure a forced circulation, within the prohibition of the statute against pub- 
lications ' designed primarily for advertising purposes or for free circulation or 
for circulation at nominal rates.' 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 49 

"8. The Postal Laws and Regulations do not prescribe how many copies 
shall be printed of each issue of a publication entitled to admission to the 
second class of mail matter, but it is required that at least 50 per cent of the 
total number of copies regularly printed and circulated by mail or otherwise 
shall be in response to a bona fide public demand for the publication on its 
merits, and this demand must be evidenced by the ' legitimate list of sub- 
scribers.' 

" 9. The legitimate list of subscribers required by the law is a list legitimate 
In its entirety; that is to say, each person listed thereon as a subscriber must 
be a subscriber in fact. 

" The following are deemed to be subscribers within the meaning of the law 
and may be included in making up such legitimate list : ^ 

"(a) Direct subscriptions to the publisher or his agent by those who volun- 
tarily seek and pay for the publication with their own money. (An individual 
subscription designated as a bona fide gift and paid for by the donor for the 
benefit of the recipient will not be objected to, but such subscriptions will be 
limited strictly to those coming within that definition and will not be permitted 
to be used as a cover for an advertising or other purpose of the publisher or 
donor. ) 

"(b) Copies regularly sold by newsboys. 

"(c) Copies regularly sold over the publisher's counter to purchasers of 
individual copies. 

"(d) Bona fide bulk sales of consecutive issues to news agents for resale by 
them in the usual way without the privilege of returning the unsold copies. 

"(e) Regular sales of copies of consecutive issues by news agents when not 
already counted under (d). 

"(f) Copies regularly supplied to local agents for delivery to bonfi fide sub- 
scribers not already counted under (a). 

"(g) Copies sent to advertisers — one copy to each — to prove insertion of 
advertisement. 

"(h) Copies sent as bona fide 'exchanges' with existing second-class pub- 
lications, one copy for another, within reasonable limits as to number. 

" 10. It is optional with the publisher as to the number of copies which he 
may print of any issue, but no copies other than those sent to persons who 
are subscribers within the meaning of the law may be mailed at the pound 
rate except those sent as sample copies, and only when properly marked ' Sam- 
ple copy ' on the exposed face of the publication or its wrapper, or on the 
wrapper of the package which may contain a bulk number of sample copies. 
And the number of sample copies which may be mailed at the pound rate with 
any issue of a publication must not, as heretofore explained in paragraph 7, 
exceed the number of copies of that issue sent to subscribers; that is to say, 
at each issue of the publication the publisher may, for every copy sent to a 
subscriber, mail one sample copy at the pound rate to a person not a sub- 
scriber. Sample copies must not be inclosed in the same package with copies 
intended for subscribers. (See sec. 456, P. L. & R.) 

" The sample-copy privilege is not cumulative, i. e., a publisher may not 
mail at the pound rate with any issue sample copies in excess of the number 
of subscribers, even though for several preceding issues no sample copies were 
mailed. 

" 11. Copies sent as samples to the same persons at the pound rate of postage 
in excess of three times, consecutively or otherwise, during any one calendar 
year will be held not to be samples. (Par. 3, sec. 456, P. L. & R.) 

"12. If sample copies, _n excess of the number hereinbefore specified (see 
par. 10), be presented for mailing, they are not entitled to the pound rate of 
postage. They are chargeable with the transient second-class rate of 1 cent for 
each four ounces or fraction thereof, to be prepaid with stamps affixed, on each 
separately addressed copy or package of unaddressed copies. 

" 13. In determining whether or not a publication is designed primarily for 
advertising purposes, or for free circulation, or for circulation at nominal rates, 
the department will, among other things, take into consideration as evidence of 
such a design the following practices : 

"(a) The sending of copies free to the recipient under the claim that they 
are subscribers. 

"(&) The regular or continuous circulation of sample copies in excess of the 
number provided for in paragraph 10, even though postage on the excess be 
prepaid at the transient second-class rate. 

86534°— 11 4 



50 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

"(c) The sending of sample copies continuously to the same persons more 
than three times, consecutively or otherwise, during any one calendar year, even 
though the postage on the excess be prepaid at the transient second-class rate." 

On page 3 of your report it is stated that the action of the postmaster at St. 
Louis, from which an appeal was taken to you by the Lewis Publishing Co., was 
under authority of the following ruling promulgated by you : 

"If sample copies in excess of the number * * * (one hundred per cent 
of the subscription list) be presented for mailing, they are not entitled to the 
pound rate of postage. They are chargeable with the transient second-class 
rate of one cent for each four ounces or fraction thereof, to be prepaid with 
stamps affixed, on each separately addressed copy or package of unaddressed 
copies." 

Was not the action of the postmaster taken under authority of section 456 of 
the Postal Laws and Regulations of 1902, paragraph 6, as well as under that of 
the ruling just quoted, viz : 

" The mailing by a publisher, as sample copies, of a larger number of copies 
than actually subscribed for in order to maintain a given circulation, or the 
continuous mailing of sample copies in excess of one hundred per cent of the 
number issued to regular subscribers, or of such copies continuously to the same 
persons, will be deemed evidence that the publication is primarily designed for 
advertising or free circulation (see sec. 428), and the sample copies should be 
detained until the facts can be ascertained. The postmaster will promptly 
report the case to the Third Assistant Postmaster General." 

The postmaster also had to bear in mind the fact, as stated in your report, on 
page 21, that " the publisher's privilege to mail copies at the pound rate is held 
to be limited to those sent to subscribers and those sent as samples." It appears 
from the tables in your report that from the month of October, 1905, to the 
month of April, 1906, inclusive, there were mailed hundreds of thousands of 
copies of the Woman's Magazine at the pound rate, which were neither sent to 
subscribers nor sent as samples. Was it not the sworn duty of the post- 
master to collect postage on each one of these copies at the rate of 1 cent per 
copy? Was not the postmaster required by law, as well as the regulations, to 
proceed as he did, and had he failed to enforce collection of the postage which 
he actually collected, would he not have been liable upon his bond for the 
amount under section 4051 of the Revised Statutes (sec. 373, P. L. & R., 1902), 
reading as follows: 

"All postages, box rents, and other receipts at post offices shall be accounted 
for as part of the postal revenues; and each postmaster shall be charged with 
and held accountable for any part of the same accruing at his office, which he 
has neglected to collect, the same as if he had collected it." 

That the department holds postmasters to strict accountability in this connec- 
tion is shown by the following note under paragraph 318, page 1036, of the 
Postal Guide for January, 1905: 

" Note. — Postmasters are reminded that under the law (sec. 373, P. L. & R.) 
they are liable on their official bonds for loss of revenue due to faulty adminis- 
tration or neglect." 

THE WOMAN'S MAGAZINE. 

The postmaster reported that of the November, 1905, issue of the Woman's 
Magazine there were mailed as to subscribers 486,305 copies in manila wrappers 
and 579,125 in blue wrappers; total, 1,065,430 copies. The postmaster also 
reported that but 574,165 copies of that issue were mailed as samples, the 
grand total of copies mailed being 1,639,595. Thus it appears by the postmas- 
ter's table that there was an alleged increase of 282,668 subscribers for the 
November issue of the magazine over those for the October issue. Even your 
own table shows an alleged increase in copies mailed as to subscribers of 
134,554 for November over October, 1905, with only 4,905 increase in current 
subscriptions. Peculiar in this connection also is the alleged increase of 332,257 
in copies mailed as to subscribers in April, 1906, over October, 1905, and a de- 
crease in current subscriptions of 48,911 for the same period. What explanation 
is there for this? 



RELIEF OE THE LEWIS PUBLISHING COMPANY. 



51 



The tables appearing on pages 4 and 8 of your report are reproduced below : 

[Page 4.] 
TOTAL MAILINGS. 



Issue. 


Copies. 


Subscribers. 


Samples. 


Total. 


October, 1905 


852,034 
986,588 
1,127,898 
1,182,854 
1,176,921 
1,138,868 
1,184,291 


603,181 
531,676 
345,690 
317,818 
312,439 
360, 420 
292,296 


1,455,215 




1,518,264 




1,473,588 




1,500,672 


February, 1906 


1,489,360 


March, 1906 


1,489,294 


April, 1906. 


1,476,587 







[Page 8.] 
SUBSCRIPTIONS. 



Date. 


Current. 


Expirations. 


Total. 


October, 1905 


576,802 
581,707 
603,477 
577,771 
559,812 
529,717 
527,891 


198,632 
187, 589 
175, 494 
196,584 
224, 492 
277,011 
292, 747 


775,434 




762, 296 




778,971 


January, 1906 


774, 355 


February , 1906 


784,304 


M arch . 1 906 


806,728 


April , 1906 


820, 638 







It will be seen by reference to the second of these tables that the number of 
copies of the publication claimed by the publisher as being sent to those whose 
subscriptions had expired, to wit, 579,000, is within 2,000 of the total current 
subscriptions, as shown on page 8 of your report. 

From this large mailing of the November issue to persons whose subscriptions 
had expired, it would appear that, as indicated in your report on page 10, 
the publisher was not, prior to the count of the postmaster and the inspectors, 
carrying on his list from 200,000 to nearly 300,000 names and addresses of such 
expirations in the hope or expectation of securing renewals. Had he been do- 
ing this prior to that count, it would not have been necessary for him to have 
sent this large / number of expirations with the November issue. 

The question before you for decision is thus stated in your report : 

"The question is simply one of fact: Did the publisher, under the ruling 
quoted on page 3, mail at the pound rate more copies of either publication than 
he was entitled to mail; and if so, to what extent did he exceed his privilege?" 

Further, you say : 

" The decision of this question depends entirely upon the number of sub- 
scribers ; that is to say, in order to decide as to whether there was or was not 
an excess mailing at the pound rate, it is necessary to find whether the persons 
whose names and addresses appear on the publisher's list as subscribers are such 
as a matter of fact and the whole number of them, the publisher under the 
ruling being entitled to mail an equal number of copies at the pound rate as 
samples." 

Then it is said that : 

" Whether the persons on the list are subscribers can not be decided upon the 
methods of the publishers in securing their subscriptions, but the result of the 
met bods may be used in finding whether or not the persons whose names and 
addresses were found on the list were in fact actual subscribers; that is to 
say. the question of whether or not such persons are in truth subscribers turns 
not upon the matter of how they subscribed or how they were secured, but is 
one of fact: Did they subscribe?" 

The statement that " whether the persons on the list are subscribers can not 
be decided upon the methods of the publisher in securing their subscriptions," 



52 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

seems to be contradictory to paragraphs (a), (&), (c), (d), (e), (/), (g), 
(i), and (j) of your circular of December 16, 1905. 

On pages 5 and 6 of your report you say : 

" Consideration must be given to the circumstance that this publication is 
sold at a very low rate, and naturally the publisher could not afford a too 
expensive system in the securing, classifying, handling, and accounting methods. 
The publisher stated at the hearing before this office substantially that he had 
sought to observe every known rule and limitation of the Post Office Depart- 
ment in the conduct of his business, and if it were found that any practice or 
method of his was in conflict with the rules he would immediately amend the 
same, for he stood ready to meet all requirements as soon as he could find out 
what those requirements were." 

It has been claimed by the Lewis Publishing Co. that it conducts the most 
profitable publishing business in the world. Accepting this claim as true, why 
should the company be excused for failing to install and keep an adequate and 
accurate system of records and accounts, from which the true condition of its 
business could be ascertained and its methods and practices in respect of its 
second-class mailing privilege shown to be in conformity with law and postal 
regulations? 

If it be true that the subscription price is so low that the publisher can not 
afford to keep accurate accounts, so that his minutes will bear an investigation, 
then it would seem that the subscription price must be merely nominal, and 
that that ought not to excuse him from keeping such accounts. 

On page 7 of your report you say : 

" The report of the commission and the voluminous exhibits accompanying it 
show the exactness and closeness of scrutiny in the work as a whole. The 
result of every test is favorable to the publisher, and where inquiries were 
addressed to the subscribers themselves the replies favored him to an average 
of about 90 per cent or over." 

This statement of the percentage of instances in which the claims made by 
the publisher were substantiated is in striking contrast with the report of the 
postmaster at St. Louis, which shows that an average of only 50 per cent of 
persons claimed as subscribers, and in* respect of whom inquiries were made of 
postmasters at the post offices of address at the rate of 1,000 a month, were 
actual subscribers. 

The table on page 4 is supposed to represent the actual mailings of the 
Woman's Magazine for the months stated, consisting of regular subscriptions 
and samples. The table on page 8 is said to represent the copies of the publi- 
cation for those months which the publisher was entitled to mail, as ascertained 
by an actual count of subscribers' orders by the commission, including those 
expired. It appears that at the time this count was made (October, 1905) the 
publisher was not treating subscriptions which had expired more than three 
months previously as legitimate subscriptions; but conceding that they should 
be so regarded to the extent indicated by your second table, the total number 
of subscriptions to which he was entitled by your count of subscription orders, 
as shown by that table, is much less each month than the number that the 
publisher mailed as regular subscriptions alone, according to your first table, 
the difference ranging from over 76,000 in October, 1905, to over 408,000 in 
January, 1906. In April, 1906, the difference was about 363,000. What expla- 
nation can you give for regarding as actual subscribers persons to whom copies 
are sent so largely in excess of the number found by your commission to be 
entitled to go at the pound rate, even though expired subscriptions be included? 
The excuse offered is: 

" The totals given in the foregoing table, it will be seen, do not agree with 
the estimates made from the pounds mailed as shown by the receipts issued 
by the postmaster. They are considerably less in each case; but at every 
mailing covered by the investigation the list of current subscriptions fairly 
allowable under the rules, excluding expirations (credits), was more than the 
number of sample copies mailed, with two exceptions — that of the October, 1905, 
issue and that of the May, 1906, issue. The current subscriptions for those 
issues, excluding expirations, were, for October, 1905, 576,802, while it appears 
from the estimate made from the postmaster's record of weight that 603,181 
sample copies of that issue were mailed, and for the May, 1906, issue, 527,891 
current subscriptions were found, while the estimate of the mailing of sample 
copies is 547,701. Therefore, except for those issues, the question of whether 
the publisher exceeded his privilege to mail copies at the pound rate is easily 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 



53 



and clearly disposed of. Whether or not there were excess mailings with the 
issue of October, 1905, and May, 1906, turns upon the question whether the 
so-called 'expirations' are allowable. If allowable, the publisher is more than 
safely within his privilege; indeed, he might have mailed many thousand more." 

The reference in the foregoing statement to the month of May, 1906, is evi- 
dently intended for April, 1906, as shown in the two tables. It is said that 
while for the May, 1906, issue 578,811 current subscriptions were found, the 
extent of the mailing of sample copies as taken from the postmaster's record 
of weight is 547.701. As a matter of fact the table on page 4 shows the num- 
ber of sample copies mailed in the month of April, 1906, as 292,296, instead of 
547,701, the discrepancy being over 255,000. How do you explain this dis- 
crepancy? 

Your statement that the totals of copies actually mailed do not agree with 
the estimates made by you, but that at every mailing covered by the investiga- 
tion the list of current subscriptions fairly allowable under the rules, exclud- 
ing expirations (credits), was more than the number of sample copies mailed, 
with but two exceptions, may explain the large mailings as samples, but it does 
not explain or excuse the mailing as subscription copies of copies largely in 
excess of the number which, according to your estimate, the publisher was 
entitled to mail during the months shown in the table. The contention of the 
postmaster at St. LOuis is not alone that the publisher has mailed sample 
copies, so marked, in excess of the number he was entitled to mail, but that he 
has mailed as going to subscribers copies of the publication largely in excess 
of the number entitled by law to be so transmitted. The publisher is required 
under the regulations to mark " sample copy " on the exposed face of every 
sample copy, or its wrappr, or on the wrapper of the package which may con- 
tain a bulk number of such copies. Also under paragraph (&), section 317, 
page 1036, of the Postal Guide for January, 1905, the publisher is required to 
'"make separate packages (or sacks) of (1) samples, (2) of other copies sub- 
ject to postage at the pound rate, and (3) copies entitled to free county circu- 
lation ; and when so presented each kind must be weighed separately, fractions 
being counted full pounds in all cases * * * and so recorded in the receipt 
book." 

The publisher offered and the postmaster accepted as mailed to actual sub- 
scribers the following number of copies for the months shown below in excess 
of the number which you report him to have been entitled so to mail, even with 
the inclusion of expired subscriptions : 





Number of copies — 




■ Issue 


Mailed. 


Entitled 
to mail. 


Excess. 


October, 1905 


852,034 
986,588 
1,127,898 
1,182,854 
1,176,921 
1,138,868 
1, 184, 291 


775,434 
762,296 
778,971 
774, 355 
784, 304 
806, 728 
820, 638 


76,600 




224, 292 


December, 1905 


348, 927 


January, 1906 


408, 499 


February , 1906 


392, 617 


March, 1906 


332, 140 


April, 1906 


363, 653 






Total 






2, 146, 728 








306,675 











Your own estimate shows that the postmaster was under official obligation 
to collect postage on these excessive mailings, approximately in the amounts 
in which he did make collections, beginning with April, 1906. 

I The statement accredited to the publisher that he carried subscriptions on 
his list six months with the expectation of securing renewals, and that the 
investigation disclosed that some of the subscriptions were carried six and 
two-fifths months, and in some cases as long as eight months, due to the methods 

i employed, appears absolutely inconsistent with the notices carried in his pub- 
lication at the time of the investigation by the post-office inspectors, and quoted 

j below : 

" Dicontinuances : Subscribers wishing the Woman's Magazine stopped at 
the expiration of their subscription need not notify us to that effect, we shall 



54 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

consider it their wish to have it discontinued if they do not renew promptly 
when notified that the time paid for has expired. 

" If you find this paragraph marked, it means that your time is out and that 
we will stop sending the magazine if not renewed within 30 days. We don't 
want to lose you, so please renew at once. If your paper comes in a blue 
wrapper, it is also a notice to you that your subscription has expired." 

Beginning with the May, 1906, mailing of the June issue of the Woman's 
Magazine, the 30-day discontinuance rule was dropped and the following notice 
substituted : 

" Discontinuances : Subscribers wishing the Woman's Magazine discontinued 
need not notify us to that effect ; we shall consider it their wish if they do not 
renew after having been notified that the time paid for has expired. 

" If you find this paragraph marked it means that your advance payment is 
out and that we will stop sending the magazine if not renewed. We don't 
want to lose you, so please renew at once. If your paper comes in a blue 
wrapper it is also a notice to you that your paid-in-advance time has expired." 

This statement of the publisher is also contradicted by Miss Eleanor Jones, 
who was a forewoman in charge of the addressing department of the Lewis 
Publishing Co. from May, 1902, to August, 1905, and who makes affidavit that 
expired subscriptions were withdrawn from the current files of the Woman's 
Magazine after three months, and were not thereafter used as current sub- 
scriptions or expired subscriptions, and that the publication was not thereafter 
mailed to such former subscribers except as sample copies not to exceed three 
times a year. Her affidavit also states that it was the custom to use blue 
wrappers upon copies sent to those whose subscriptions have expired, as long 
as their names were retained in the files. Miss Jones is of known reliability and 
standing, and her statement in this and other respects bearing on the methods 
employed by the publishing company are supported by those of her sister, Miss 
May Jones, and two other employees of the publisher, whose affidavits were 
taken. These affidavits are before me. Furthermore, when the inspectors and 
the postmaster made their count on October 13, 1905, they found that the card 
records containing names of persons whose subscriptions had expired from three 
months to three years prior thereto were secured by rubber bands, which were 
so rotten that when the bundles were opened the bands fell to the floor in 
pieces, indicating clearly that these records were not being used regularly for 
mailing purposes, as claimed; while the current card files were wrapped with 
fresh rubber bands and indicated continued and regular use. 

The publisher's statement seems to be disproved by the fact that on October 
20, seven days after the inspector's count, according to the postmaster's figures, 
there were mailed as to regular subscribers 579,125 copies of the November, 
1905, issue, in blue wrappers (indicating that the subscription had expired), 
which was within 2,000 of the number of current subscribers that you credit 
him with having. This, in itself, would condemn the publisher under the 
ruling quoted on page 10 of your report, for the reason that according to your 
figures he mailed with this issue 936,557 copies of the publication as sample 
copies, and to persons whose subscriptions had expired, as against a current 
subscription list conceded by you for that month of 581,707 ; an excess of 354,850 
copies sent " free to the recipients thereof " over those sent to subscribers and 
paid for. 

On page 10 of your report it is said : 

" No satisfactory basis for a calculation as to what percentage of the ex- 
pired subscriptions were actually renewed was found. If renewals were made 
after the expiration of a period of eight months (some were carried even 
longer), the original evidence of subscription had by that time been destroyed 
and the renewals were counted as original subscriptions are counted. It turns 
out, then, that a person who had subscribed for one year and who had not re- 
newed at the end of the year would be carried on the publisher's books as a 
subscriber for six months, and possibly eight months. If he renewed within 
that time his subscription was dated to begin at the expiration of the old. If 
at the end of six or eight months he would fail to renew, six or eight copies, 
as the case might be, would have been sent him free. If he had renewed after 
eight months, which appears to have been true in some thousands of cases, the 
subscriber would be treated as new, no charge being made for the copies over 
and above the number due him on the previous subscription. This might happen 
over and over again with the same subscriber." 

In the thousands of cases referred to in the above statement, one of two 
conditions must have existed; either the person receiving the publication for 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 55 

eight months after his subscription had expired was a subscriber, or he was 
not a subscriber. If the latter, he was receiving the paper as a sample copy 
for eight months after his subscription had expired, and the publisher was 
violating the provisions of the regulation prohibiting the sending of sample 
copies more than three times a year to one person. Of course such copies 
should have been prepaid eqch with a 1-cent stamp. If the former, the publisher 
was furnishing the publication 20 months for 10 cents, which, under your ruling 
as given on page 21 of your report, was a nominal price. The effect of this 
practice was to reduce the annual subscription price in all such cases to 6 cents 
per annum. They could not, therefore, properly be regarded as legitimate sub- 
scriptions, and each copy so mailed to any such subscriber after the date of 
expiration of his subscription should have been prepaid with a 1-cent stamp. 

Considering further the question of nominal rates, it is observed that while 
in October, 1905. according to your statement, the publisher had 576.802 sub- 
scribers, he mailed for that month 1,455,215 copies. If, therefore, the adver- 
tised price of 10 cents per annum was received on each of his current sub- 
scriptions, the publisher obtained $57,6S0.20 for copies going 12 times per 
annum to 1,455.215 persons, or at the rate of 3.9 cents per copy per annum for 
the copies mailed for that month. Why did this not reduce the subscription 
price to the nominal rate, and how can it be claimed that the issue of the pub- 
lication for that month was entitled to transmission at the pound rate? 

It is observed that for the year ending December 31, 1905, according to page 
14 of your report, the moneys received on account of subscriptions to the 
Woman's Magazine were $50,100.04, while according to page 4 of that report 
the publisher was mailing an average of 1.4S2,355 copies of the publication 
monthly, thus reducing the annual subscription price on those mailed to ap- 
proximately 3J cents per copy per annum. Using these figures as a basis, it 
appears that while $50,100 was received for subscriptions, the publisher was 
paying for postage at the pound rate over $36,000 per annum, making his net 
receipts from subscriptions about $14,000 per annum, while he mailed an 
average of about 1,500,000 copies monthly. His compensation, therefore, for 
each copy per annum was about nine-tenths of 1 cent. If this is not a nominal 
rate, it would appear to be impossible to find one. 

On page 11 of your report you say : 

" There is no authority of law for holding that a subscription must be paid 
in advance, and no authority of law for holding that every subscription termi- 
nates at the expiration of the period for which it is written. It is upon this 
construction, existing since the passage of the act of March 3, 1879, that the 
carrying of expired subscriptions is permissible. Of course, no publisher secures 
a renewal of every subscription carried as a credit after expiration. That 
could not be expected. It is, however, reasonable to expect that a publisher 
should be able to show that he does secure a fair percentage of renewals from 
the person's he carries. He should, indeed, be able to show that at least two 
out of every three, and certainly as many as three out of every five, actually 
renewed. If such a rule had been in existence and applied to this particular 
case, we should probably rule out a great percentage of the number of sub- 
scriptions carried as expirations." 

You say there is no authority of law for holding that subscriptions must be 
paid in advance, and that every subscription terminates at the expiration of the 
period for which it is written ; yet in the Official Postal Guide for January, 
1905, on page 1041, it is said that " subscribers within the meaning of the law " 
include those who " voluntarily seek and pay for the publication with their own 
money." 

How do you reach the conclusion that persons carried as subscribers 6 or 8 
months after the expiration of their subscriptions, and who have indicated no 
intention or desire whatever that the subscriptions be continued, and who, 
according to the publisher's advertised rule, will not be recognized as sub- 
scribers beyond 30 days after the expiration of their subscriptions, are legiti- 
mate subscribers? Is it fair or logical to place in the same class, and deal with 
alike, publishers who number their subscribers by the hundreds of thousands 
and who address themselves to the entire country and publishers of country 
weeklies who are constantly in close touch with their patrons and have either 
personal acquaintance with them or accurate knowledge of their integrity and 
financial ability? In the case of the large publisher expired subscriptions are 
carried for the clear purpose of being used as the basis for the circulation of 
sample copies at the pound rate of postage. In the case of the country pub- 
lisher there is no such purpose. In the present case the publisher has an- 
nounced to all of his subscribers that if they wish the magazine stopped at 



56 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

the expiration of their subscription, they need not give notice to that effect; 
that it will be considered their wish that the publication be discontinued if they 
do not renew promptly when notified that the time paid for has expired. They 
are further informed: 

" If you find this paragraph marked, it means that your time is out, and 
that we will stop sending the magazine if not renewed within 30 days." 

Is not the publisher to be bound by the rule which he himself has established 
and announced to all his subscribers? How can he be allowed to claim as sub- 
scribers persons whose subscriptions have expired for periods of 6 to 8 months, 
when he has declared that they will not be recognized as subscribers after 30 
days beyond the date of expiration of their subscriptions? 

Significant in this connection is the fact that after the inspectors' investi- 
gation, and when your commission took up their investigation at St. Louis, in 
May, 1906, the publisher changed these standing notices; and, in the June 
number, eliminated the 30-day expiration rule, showing an acute change in his 
policy of treating expired subscriptions. I am informed that until the inspec- 
tors' count the publisher followed the 30-day rule and did not carry expired 
subscriptions as he now represents to you. He also, after this count, changed 
his system of mailing, which action, according to his own employee (Mr. 
Miller), was to confuse the post-office authorities who were trying to ascertain 
the extent of his legitimate subscription list. What motive can be assigned for 
this sudden change of policy other than of covering up excessive mailings prior 
to the investigation by the postmaster and post-office inspectors in October, 
1905, and to safeguard like irregular practices in the future against detection? 

In the case of the country weekly, on the contrary, the publisher accepts 
credit of the subscriber upon faith that he has ability and inclination to pay 
for the publication and that he desires it to be continued. He would have no 
motive in sending the paper to a subscriber whose term had expired other than 
that of finally obtaining payment for the publication. 

In the case of the mail-order publisher only a small percentage of renewals 
are obtained from persons whose subscriptions have expired and who continue 
to be carried as subscribers, while with the country weekly practically all 
of such persons so carried renew their subscriptions. 

Should a publication of this kind, characterized by you as a mail-order publi- 
cation, be classed with either the country press or with the large and estab- 
lished magazines which are desired for their literary merit, and which are sold 
for substantial prices at news stands, and generally mailed in bulk, only a 
small proportion being sent in single wrappers to individuals through the mails? 

On page 12 of your report you state : 

" So far we have never had any ruling at all on this subject other than the 
one quoted from Circular XXV, and it is indefinite as to proportion and length 
of time, and so far as it goes has not yet been applied in a single case." 

The provision of the circular referred to is: 

" Expiration subscriptions may be carried when necessary for a sufficient 
time to enable the publisher to ascertain whether it is the intention to renew. 
After the expiration of such reasonable time they will no longer be recognized 
as actual subscriptions, and in all cases the ratio of expired subscriptions to the 
whole list, irrespective of time carried, will be considered and given weight in 
determining the legitimacy of lists of subscribers and the primary design of 
the publication." 

Do not Sections II and VIII of the syllabus prepared in your office on de- 
cision of the supreme court of the District of Columbia in the case of Conant v. 
Postmaster General apply to this case? The sections read as follows: 

" II. Where a considerable portion of the persons listed as subscribers appear 
to be those whose subscriptions have expired; held, that such persons could 
not reasonably be counted as a part of the legitimate list of subscribers." 

" VIII. While the statute does not put any express limitations upon the 
number of sample copies circulated, such copies must be samples in fact, and the 
publisher wishing to obtain the benefit of the section must show the utmost 
good faith, and not attempt to evade it by any device." 

According to your table, the current subscriptions for November of 1905 were 
581,707 ; the mailings that month to those whose subscriptions had expired were 
404,881 copies, and in addition to this there were 531,676 samples, so marked. 
Considering the large number of samples mailed that month, is not 404,881 
copies a " considerable portion," within the meaning of Paragraph II of the 
above-mentioned syllabus? If so, should it not be held (as it was in the Conant 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 57 

case) that such persons could not reasonably be counted as a part of the legiti- 
mate list of subscribers? 

Should not the lack of " utmost good faith " on the part of this publisher, 
and his attempt to " evade " by " devices " the limitations upon the sample- 
copy privilege, be applied to this particular case, as referred to in Paragraph 
VIII of the syllabus above quoted? 

On page 20 of your report you quote a provision of Circular XXV as to rates 
and numbers of subscriptions, and state that ruling of Circular XXV to be 
applicable to this case. Why is one ruling of the circular applicable and not 
another? And what is the basis of your construction on page 10 of your report 
that the expired subscription ruling in Circular XXV does not go to the legiti- 
macy of lists of subscribers as applied to excess mailings as well as to the 
primary design of the publication? In this connection attention is called to the 
January (1905) Postal Guide, page 1040, paragraph 7, which states: 

" Under the act of March 3, 1879, a publication, to be admissible to the second 
class of mail matter, must, in addition to complying with the other requirements 
of the law, have a ' legitimate list of subscribers.' This list of subscribers must 
be legitimate in its entirety. And the sending of copies free to the recipients 
thereof to a number in excess of the number sent to actual subscribers will be 
taken as evidence that the primary or chief purpose of the publication is not 
to meet a .real demand on the part of subscribers, but to secure a forced cir- 
culation, within the prohibition of the statute against publications ' designed 
primarily for advertising purposes, or for free circulation, or for circulation 
at nominal rates.' " 

According to your own tables, it is shown that this publisher is sending free 
each month copies of the Woman's Magazine in the following numbers, in excess 
of those sent to actual subscribers : 

Excess. 



1905. October... _ { ^2, 034 

November / 9S6 ' 5S8 

November .j 762) 2 96 

1, 

778, 971 

1906. January _{ lj J2J 



December .{ ^ 



854 
355 



r, oKr , inr „ f 1,176,921 

February _| ^ 3Q4 

March / 1 ' 138 ' 86S 

806, 728 



April _{ 1 ' 



184, 291 
820, 638 



76, 600 
224, 292 
348, 927 
408, 499 
392, 617 
332, 140 

363, 653 

2, 146, 728 

making, according to your table, 2,146,728 copies of the Woman's Magazine 
which were mailed neither to subscribers nor as sample copies. It was evidently 
the duty of the postmaster, under the regulations, to collect advance postage 
on these copies at the rate of 1 cent a copy, which would amount to $21,467.28. 
Waiving the provisions of Circular XXV, under what construction of this rule 
can it be held that these copies of the paper were entitled to admission to the 
mails at the pound rate? It is shown beyond controversy, and is admitted, that 
they were not sent either as current or expired subscriptions. Neither were 
they marked and sent as samples, as is required by the regulations. Is it 
possible that the publisher, by refusing to obey the regulations requiring sample 
copies to be so marked, can be permitted to send out any number of copies 
to persons who are not subscribers, at the pound rate? 

Further, under what construction, as argued on page 10 of your report, can 
copies of the publication sent free in excess of the number sent to actual sub- 
scribers come within the prohibition of the statute, as applied to the question 



58 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

of primary design of the publication, and yet not come within such prohibition 
as applied to a question of excess mailings? Attention is called to your con- 
clusion on page 14, " but it is not clear that the income from subscriptions, both 
new and renewals, indicates a percentage of renewals great enough to war- 
rant the carrying of such a proportion of expirations," and also to the fact 
that, while from December, 1905, to April, 1906, both inclusive, copies mailed 
by him to persons whose subscriptions had expired, according to your table on 
page 8, gradually increased from 175,494 to 292,747, yet the current subscrip- 
tions decreased from 603,477 to 527,891. 

Under what construction do you hold that there is no reduction from the 
nominal price in a case where the publication, as in this instance, is sent in 
many thousands of cases free for 8 months after the subscription term has 
expired, or a total of 20 months for the annual subscription price of 10 cents, 
or at the rate of 6 cents per annum, while holding that there is a reduction 
from the nominal price when under a clubbing arrangement the publication is 
sent at the price of 6 cents per annum or less, as indicated on pages 21 and 22 
of your report? 

The table on page 8 of your report shows the publisher to be entitled, in your 
judgment, to carry expired subscriptions for the month of December, 1905, to 
the number of 175,494, and his current subscriptions for that month to be 
603,477. That table also shows that, in your opinion, the publisher was en- 
titled to carry for the month of April, 1906, expired subscriptions to the number 
of 292,747, and that his current subscriptions were 527,891. Thus it is indi- 
cated that the current subscriptions to the publication for the month of April 
were 75,586 less in number than those for the month of December preceding; 
but you have allowed as legitimate for the latter month 117,253 more expired 
subscriptions to the publication than you have allowed for the former. The 
claiming by the publisher of this additional number of expired subscriptions 
seems to admit of but one interpretation, viz, that he requires that number to 
free himself from the charge of mailing in April more copies than he was legally 
entitled to mail. But how do you reach the conclusion that such claim is proper 
and that the publisher should have the benefit of what seems to be a mere 
subterfuge? 

Why, for the month of October, 1905, is this publisher granted such extended 
expiration privileges to either magazine when, according to the statement of 
his ex-employees, the inspectors, the postmaster, and his 50 clerks, who made 
the count October 13, 1905, he was not using his expired subscriptions regularly 
to exceed four months in the case of the Woman's Farm Journal, or to exceed 
three months in the case of the Woman's Magazine? If, as stated by you on 
page 12, the necessity of a rule fixing definitely the proportion of expired sub- 
scriptions which may be carried, and the time for which they may be carried, 
has frequently been felt, why has not such a rule been made? And if, as you 
state on page 15 of your report, the publisher of the Woman's Magazine is 
violating the spirit of the second-class privilege, why is not such a rule now 
applied? 

On page 20 you say: 

" I hold that the publisher of any publication sold as low as 10 cents a year 
is not entitled to make any reduction whatever in the price to subscribers by 
any process whatever directly or indirectly. I deem it proper to enforce such a 
ruling in this instance, and therefore reject all those subscriptions where the 
alleged subscribers paid less than the advertised price, on the ground that they 
do not constitute actual subscriptions." 

How, then, can you hold that persons whose subscriptions have expired and 
whose names are carried for 8 months thereafter, and who, upon renewing 
subscription receive the publication at the fixed price of 10 cents from and 
after the date of the renewal, are legitimate subscribers? Is not the total 
term for which the publication is thus received by such persons at the price 
of 10 cents 20 mouths? In other words, the publication is paid for for 12 
months, and at the end of that time the publisher continues to send it for 8 
months longer without charge. Does not the publication thus go to the sub- 
scriber, whose subscription has expired for 8 months, at the rate of 6 cents 
per annum? And do you not hold any subscription rate below 10 cents per 
annum to be nominal? You say, moreover, that the proceedings outlined occur 
over and over again, and it is clear that each repetition reduces still further 
the annual subscription rate. The effect, of course, is precisely the same 
whether the subscription is renewed or not after 8 months from expiration. 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 59 

On page 16 of your report you state : 

"During this publisher's trouble with the postmaster at St. Louis a consid- 
erable sentiment in bis behalf was created throughout the country. Many 
people seemed to believe that he was being abused or illtreated, and some, as a 
measure of assistance to him, paid for copies of the Woman's Magazine to be 
sent to third persons which the publisher himself should select. Large num- 
bers of copies were sent out under this arrangement, but it was only a tem- 
porary condition and applied to only occasional issues. 

" Under the rules of Circular XXV. if in force, the great bulk of the alleged 
subscriptions paid for in this way would not be acceptable at the pound rate. 
They would be subject to the transient rate of 1 cent for each 4 ounces or frac- 
tion. That rule, as you will recall, has been set aside in the case of the stock 
journals, which are by far the worst offenders in this regard in the country. 
Their practices are one of the worst abuses of the second-class privilege. The 
circumstance that we suspended this rule in the case of the stock journals makes 
it impossible in fairness to now apply the rule to the Woman's Magazine, espe- 
cially so because in that case it was but a small fraction of the whole circulation 
to subscribers, while in the case of the stock journals it constitutes the bulk of 
their circulation and is the basis of their so-called legitimate list of subscribers. 
With them the practice is permanent and continuous in the face of their knowl- 
edge of the department's ruling, while so far as we know, this publisher is 
ignorant of the ruling. 

" Another reason why it would be unfair to enforce this ruling in this instance 
is that recently when the ruling was brought to judicial test in the case of the 
Iowa Homestead and the department was sustained by the courts, we refunded 
to the publisher the 4-ounce rate and permitted the copies paid for by others to 
be mailed at a cent a pound to the end of the publisher's contract with the 
persons interested in the circulation of the paper for business reasons." 

On what information is your statement based that for reasons of sympathy 
with this publisher, because of his " trouble " with the postmaster at St. Louis, 
many people, as a measure of assistance to him, paid for copies of the Woman's 
Magazine to be sent to third persons whom the publisher himself should select, 
and that under this arrangement large numbers of copies were mailed, but 
that it was only a temporary condition and applied only to occasional issues? 

My information is that the " trouble " of the publisher with the postmaster 
at St. Louis did not begin until October 11, 1905. The publisher, however, has 
declared in a letter dated November 20, 1905, that as early as the previous 
June he had mailed 48.544 copies of the Woman's Magazine to persons whose 
subscriptions were paid for from a -special fund of $10,000 provided by his 
friends and sympathizers, and that the names of such persons had been selected 
by him at his discretion. In the same letter the publisher stated that he sent 
in a simMar fashion 92,100 copies of this publication for July, G0,090 copies for 
August, and 85,147 copies for September. The publisher has failed to substan- 
tiate his statements as to the existence of any such fund, or that any such 
contributions have been made; nevertheless, his claim is that there was such 
a fund, and the effect of his statements is that it was in existence prior to the 
time when his trouble with the postmaster began. Have you any information 
as to the amount of such contributions, and by whom were they made? If so, 
please furnish it. 

On page 17 you state that these paid-for-by-others subscriptions, which you 
state were sent out in large numbers, would not be acceptable at the pound 
rate under the rules of Circular XXV, if in force. That circular, which was 
issued December 16. 1905. was sent to the postmasters at St. Louis and other 
cities, with instructions to notify publishers and to make it effective April 1, 
1906. The postmaster so notified this publisher in the latter part of December, 
1905. and on April 6 took action under such instructions by charging the 
transient second-class postage on such excess mailings. 

Among the instructions as to examination of second-class matter on page 
1036 of the January (1905) Postal Guide, of which the postmaster was obliged 
to take cognizance, is the following: 

"Postmasters are reminded that under the law (sec. 373, P. L. & R.) they 
are liable on their official bonds for loss of revenue due to faulty administration 
or neglect." 

In addition to this, your letter of April 6, 1906, to the postmaster at St. Louis, 
in answer to an inquiry as to whether he should take action on the April, 1906, 
mailings of this publication, states : 

" Inasmuch, however, as it is the duty of the postmaster to charge the lawful 
rate on matter passing through his hands it would be your duty, whenever 



60 RELIEF OP THE LEWIS PUBLISHING COMPANY. 

the facts before you justify you in holding that the copies are in fact excess 
copies, to charge upon such excess the rate I have already mentioned, namely, 
the transient second-class rate." 

Why was the action of the postmaster not proper, and why should not the 
money collected by him be retained, when he acted directly under your instruc- 
tions? Have you at any time notified the postmasters of the country that the 
provisions of Circular XXV were suspended or revoked? 

Apropos of the statement of this publisher that " he had sought to observe 
every known rule and limitation of the Post Office Department in the conduct 
of his business, and if it were found that any practice or method of his was in 
conflict with the rules he would immediately amend the same, for he stood 
ready to meet all the requirements as soon as he could find out what those 
requirements were," your attention is directed to the following statement taken 
from a letter written by F. J. Cabot, the secretary of the company, to one of 
its employees : 

" In other words, the less they (Post Office Department) know of our busi- 
ness, the better. I have nothing to hide, but I'll be d — d if I want them to run 
our business, or even know what we are doing." 

The refunding of the 4-ounce rate to the publisher of the Iowa Homestead, 
referred to by you on page 17 of your report, was recommended by you, and 
the memorandum, signed by me, now in the case, was prepared in your office 
and submitted to me by you, with your recommendation that I approve it. The 
circumstances in that case were peculiar to that publication, and it was solely 
by reason of those special circumstances, as stated in the memorandum, that 
the course recommended by you was pursued. It is shown by your report that 
the position taken by the department in that case, namely, that subscriptions 
paid for by others were not legitimate, was sustained by the courts. This being 
true, why is the department not warranted in making the most of that decision 
and treating as illegitimate such subscriptions in this case, in respect of which 
you state your belief " that the publisher of the Woman's Magazine is violat- 
ing the spirit of the second-class privilege," etc.? 

That other publishers are abusing the second-class privilege is of no rele- 
vancy in the consideration of this case. In the two instances you have cited, 
in which, as a matter of fact, there has been as yet no such thorough investiga- 
tion as has been made in this case, action was merely suspended pending a 
report of the Postal Commission, with the distinct instruction conveyed by me 
that if no legislation was enacted by Congress the cases should be taken up 
for disposition under our present statutes. When you have sufficient informa- 
tion that other publishers are guilty of such flagrant abuses, then your duty 
will be plain; you should promptly take up such cases and deal with them 
according to the law and the facts. Neither is it proper that in deciding this 
case you should take into view the question of expediency or policy. Your 
decision in this matter should be based exclusively upon the law under which 
you are proceeding and the evidence before you. Nor is it important whether 
the investigation was instituted upon your motion or at the instance of the 
Postmaster General or some other officer of the Post Office Department; the 
abuses must be corrected, whether discovered by officers of your bureau or 
those of other bureaus of the Post Office Department. Your instructions were 
to take this case under consideration, examine all the evidence available, and 
to base your decision solely upon the law and the evidence. 

You notified me when this case was submitted to you that you expected 
shortly to take up the consideration of this class of periodicals. Why is not 
your investigation in this case, which you say, on page 18 of your report, " is 
unusual in that, so far as known, never before have any publisher's business 
methods been subjected to such a raking scrutiny," properly the beginning of 
such scrutiny of such periodicals? As you say, on page 19 of your report, " the 
wisdom of singling out one or two publications to be dealt with in advance of 
being ready administratively to handle the class as a whole, may well be 
doubted," and its unwisdom as a general proposition was fully realized by me 
when the case was turned over to you. There can be, however, no question as 
to my duty and yours in dealing with practices which are illegitimate when 
found in any class of publications to which existing law and regulations prop- 
erly apply. This aspect of the case was fully understood, and my desires 
concerning it clearly stated in repeated conferences with you regarding the 
case. According to your. own figures, it is not necessary to deal with the 
abuses peculiar to any particular class of publications to find in this case prac- 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 61 

ttcea which when disclosed in the business of any publisher call for depart- 
mental action. 

On page 19 of your report you state: 

" If the postmaster conceived the Woman's Magazine to be an abuse, in whole 
or in part, of the second-class privilege, it was his duty to report his reasons 
for so believing to the Third Assistant Postmaster General and await instruc- 
tions. It was wrong for him to proceed on his own motion and according to 
his own methods and judgment." 

This is precisely what the postmaster did, as shown by his letters to you of 
November 11, 1905, and March 15 and April 2, 1906, which should be on file in 
your office with copies of your replies thereto. His action in collecting postage 
was not taken until April 6, subsequent to the date of his communications to 
you, and in taking that action he was simply obeying the postal laws and regu- 
lations and the orders from your bureau, and he would have been derelict if 
he had not done so. If " it was wrong for him to proceed on his own motion 
and according to his own methods and judgment," in these matters, then the 
regulations with which he complied should be rescinded. 

You state that whether this publisher be good or bad has nothing to do with 
the question of rate of postage on his periodicals. This is true, \mt have you 
given due consideration to the bearing the department's repeated experiences 
with him must have on his important and material statements? You have 
practically accepted as true those statements, in so far as they pertain to the 
methods of treatment of expirations, as against the statements of the post- 
master and his 50 clerks, the inspectors, and of reputable employees and ex- 
employees of the publisher, who state exactly the contrary. And are not these 
statements of the publisher discredited by your findings, as exhibited by your 
report? Especially should his statements be carefully investigated when he 
states, as he does in a letter dated March 14. 1905, that " the paid-in-advance 
subscription to tJ5e Woman's Magazine is 1,250,000," as against your finding of 
approximately 565,300: and that "the paid-in-advance subscription to the 
Woman's Farm Journal is in advance of 500,000," as against your finding of 
approximately 182,150. 

Applying the rule announced by you in your Circular XXV, you have rejected 
subscriptions for the Woman's Magazine to the number of 24.115, for the rea- 
son that such subscriptions were secured by so-called clubbing arrangements 
with other publications, which you hold to be objectionable. Your objection 
is that such subscriptions were paid for at less than the advertised price; so 
much less, indeed, as to make the subscription rate merely nominal. But, 
while rejecting those subscriptions and declaring them to be illegitimate, you 
propose to direct the postmaster to return to the publisher the money collected 
upon copies sent in pursuance of such subscriptions, as well as copies sent as 
samples / upon that basis from October, 1905, to the present time — approxi- 
mately $7,716.80. If these subscriptions are illegitimate, then how can you 
hold that copies of the publication which have been sent heretofore to such 
subscribers, and sample copies in equal number, are entitled to transmission 
at the pound rate of postage? 

THE WOMAN'S FARM JOURNAL. 

It appears from your report that you regard the situations of the Woman's 
Magazine and the Woman's Farm Journal as quite similar and that you based 
your action in both cases upon practically the same reasons. The general 
queries put to you in reference to the former publication are therefore to be 
taken as applying similarly to the latter. 

You state that the question in this (Farm Journal) case "depends upon the 
decision to be made as to expiration subscriptions. If allowed, he is within his 
privilege; if disallowed, he has exceeded his privilege." It appears that the 
question does not depend upon the matter of expired subscriptions alone, for the 
reason that copies of the October (1905) issue of this publication included in 
manila wrappers were not mailed as going to persons whose subscriptions had 
expired, as claimed by the publisher. The publisher mailed in October copies 
of the October issue about equal in number to his legitimate subscription list, 
of which 167,605 were in white wrappers, as is testified to by inspectors, the 
postmaster, and employees and ex-employees of the publisher. He mailed 
144.930 copies of that issue in manila wrappers and 38,255 copies in blue 
wrappers. The total number of copies mailed in the three kinds of wrappers 
(white, manila, and blue) were 350,790, all of which were treated as going to 



62 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

current subscribers. The 38,255 copies in blue wrappers were mailed as going 
to persons whose subscriptions bad expired, to wbom it had been the custom to 
send three copies a year in blue wrappers. The publisher first claimed to the 
inspectors and the postmaster that 144,930 copies mailed in manila wrappers 
as going to subscribers were on account of expired subscriptions ; and you have 
substantially taken his figures as correct by conceding, on page 26 of your 
report, that he has the privilege of mailing on account of expired subscriptions 
a number approximately equal to that stated by him, to wit, 145,991. How- 
ever, in a subsequent letter, dated November 20, 1905, the publisher admits that 
140,000 of the 145,000 copies which he was permitted to mail on account of 
expired subscriptions for October, 1905, were mailed to persons other than sub- 
scribers, whose names were selected by the publisher himself, and which were 
paid for out of a special fund that had been subscribed by his friends and 
sympathizers. 

This practice of using names other than those of persons whose subscriptions 
had expired is testified to by Mr. Eylerman, one of the present employees of the 
publisher, who states that prior to the inspectors' count in October, 1905, the 
" lot numbers," or " sample-copy names," were used to pad the subscription list, 
and that this practice had been in operation since early in the year 1903 ; that 
the list of each publication was in this manner padded to the extent of about 
125,000 every month. 

It will be noticed here that on page 26 of your report the Woman's Farm 
Journal is shown to have had 153,597 current subscriptions for October, 1905, 
and to have mailed free 448,962 copies. Is not 448,962 copies a " considerable 
proportion," within the meaning of those terms as used in the case of Conant v. 
The Postmaster General; and if so, why should action not be taken in accord- 
ance with that decision? 

This information, and all the other material evidence herein given, bearing on 
the alleged misstatements, etc., of this publisher, are said to have been given 
your commission in full by the postmaster and the inspectors during their 
investigation* at St. Louis. Under what construction of the law and regulations 
should the postmaster be instructed to return money collected for transient 
second-class postage on copies of the publication which were not even sent to 
persons who had been subscribers and whose terms had expired, tout were sent 
to parties who had never subscribed but whose subscriptions are claimed to 
have been paid for by others, which claim, however, the publisher has never 
substantiated within the knowledge of the postmaster or the inspectors? This 
question is pertinent for the reason that on December 19, 1906, when the post- 
master at St. Louis submitted to you the question whether subscriptions to the 
Woman's National Daily, which had been paid for in large numbers by agents, 
were legitimate, you answered, under date of December 22, that " persons are 
not subscribers to Woman's National Daily whose subscriptions are/uot paid for 
by themselves but by other persons competing in a subscription-gathering con- 
test." If this rule is applicable to the Woman's National Daily, why is it not 
applicable to the Woman's Farm Journal and the Woman's Magazine? 

You state on page 27 of your report in referring to the matter of expired sub- 
scriptions being carried from 14 to 16 months on this publication that, " as 
stated before, we have no definite ruling as to the proportion or length of time 
expired subscriptions may be carried, and we are here in the same embarrassing 
situation in making a ruling. If this case stood alone there would be no doubt 
as to the proper decision to make." You further state that you consider " the 
carrying of such a volume of expired subscriptions and for such a length of time, 
especially in such a low-priced publication, as a grave abuse." 

The mere fact that this case does not stand alone in your judgment must 
not influence your determination upon the question before you. If the circum- 
stances are such as, in your view, constitute a grave abuse, and there is author- 
ity under the law to put an end to that abuse, your report should so state. 

Comparing the number of expired subscriptions to the Woman's Farm Journal, 
treated by you as continuing subscriptions, with the number of such subscrip- 
tions to the Woman's Magazine treated in like manner, why was the proportion 
of expired subscriptions to current subscriptions conceded only to the extent 
of 34 per cent in the case of the Woman's Magazine, while the far greater pro- 
portion of 74 per cent was allowed in the case of the Woman's Farm Journal? 
Are we not forced to the conclusion that the publisher began the use of sub- 
scriptions which had expired over three months previously for the purpose of 
maintaining his mailings as to subscribers at the number claimed prior to the 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 63 

October count by the postmaster and the inspectors; and that he is claiming 
just such number each month as is necessary to meet the needs of each pub- 
lication in avoiding payment of transient second-class postage? 

On page 26 of this memorandum it was pointed out that a total of 285,881 
copies of the Woman's Magazine was claimed by the publisher to have been 
paid for and mailed from a special fund of $10,000 provided by his friends 
and sympathizers. A total of 427,5S0 copies of the Woman's Farm Journal is 
also claimed by the publisher to have been mailed and paid for out of the same 
fund, at the price of one-half cent a copy. The same inquiry is made in respect 
of such copies of the Woman's Farm Journal as was made concerning those of 
the Woman's Magazine: Why should not postage at the transient rate have 
been collected on all these copies? 

Your statement that there were 145,991 expired subscriptions in October, 
1905, of tbe Woman's Farm Journal is met with results of tests made by the 
postmaster and information given by the publisher that seem to clearly dis- 
prove the mailing of any such number of copies that month to persons whose 
subscriptions had expired. There were 350.720 copies of that issue mailed as 
to actual subscribers. The postmaster at St. Louis sent 1,000 inquiries to post- 
masters at offices to which such copies were mailed to ascertain whether the 
persons receiving them had ever subscribed for the publication. It was de- 
veloped .that 45 per cent of such persons were current subscribers; that 2.75 
per cent had been subscribers but their subscriptions had expired; and that 
52.25 per cent had never subscribed, thus showing clearly that had the 144,930 
copies mailed as going to subscribers in manila wrappers been addressed to 
those whose subscriptions had expired, as originally claimed by the publisher 
and as is now stated by you, the percentage of expired subscriptions would 
have been 40 per cent instead of 2.75 per cent. A second test based upon the 
145.991 copies mailed in manila wrappers, which the publisher claimed to have 
been sent to persons whose subscriptions had expired, showed that 90 per cent 
of such persons had never subscribed. Like tests made by the postmaster for 
November, December. January, February, March, and April following, show 
that during the November mailing, which was after the count, the publisher 
grasped the expiration idea, and his mailings of copies that month to persons 
whose subscriptions had expired increased from 2.75 per cent to 30 per cent, 
and maintained practically that ratio thereafter, and that his mailings to non- 
subscribers decreased from 52.25 per cent in October to 9 per cent in November, 
dearly indicating his change in policy after the count. In addition to this 
the inspectors submitted to the publisher about November 15, 1905, names of 
500 of the persons to whom 144,000 copies of the October issue had been mailed 
in manila wrappers and which the publisher claimed were going to persons 
whose subscriptions had expired. The inspectors called upon the publisher to 
submit thq card records of such former subscriptions. He was able to furnish 
the inspectors but 6 cards out of the 500. He was called to the post office 
subsequently, and when shown the result of the tests and asked for a further 
statement he admitted that the 144,000 copies sent out in manila wrappers dur- 
ing October were not copies sent to persons whose subscriptions had expired, 
as originally claimed by him and as you now contend, but were sent to parties 
whose names were selected by him and were paid for out of the special fund 
subscribed by others. This statement he reduces to writing in a letter on No- 
vember 20, 1905, giving the number of copies alleged to have been mailed and 
paid for out of this special fund for the preceding months, a copy of which 
letter is before me. Inasmuch as the tests made showed that the persons to 
whom the publisher claimed to have sent these copies had never subscribed 
therefor, and as the publisher subsequently admitted that they were not former 
BUbscri Iters, why do you in your report accept his original statement as true 
and credit him with 145,991 copies as having been mailed in October, 1905, to 
persons whose subscriptions had expired? In this connection it may be stated 
that all of the above information was given to Mr. Fettis, of your commission, 
by the inspectors, and should have reached you. If it did, upon what basis do 
you rule that the postmaster should return the postage collected on such 
illegitimate mailings? 

I wish you to reconsider this case in the light of the inquiries and suggestions 
contained in this memorandum. You are not to determine whether it is 
politic or impolitic to rule upon this matter, either the one way or the other. 
Your duty is merely to examine all the evidence before you and from whatever 
source derived, and determine whether under the law the action of the post- 
master at St. Louis was proper and should be sustained or was improper in 



64 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

whole or in part and should be reversed. You may have reason to believe that 
there are other publishers whose methods and practices are as bad as or worse 
than those of this publisher, but that fact certainly has no bearing upon the 
action which your duty demands you to take as to those features of the case 
which should be considered without regard to the class to which it belongs. 

It seems to me that in giving credence to the claims of the publisher you 
have entirely lost sight of the findings of the postmaster at St. Louis and the 
post-office inspectors. Certainly the investigations made and reports submitted 
by those officers are entitled to at least equal weight wi^th the claims of a 
publisher who is under investigation. It should be remembered also that the 
original investigation by these officers was made at a time when the methods of 
the publisher were more nearly normal and when he was not contemplating 
investigation by the Post Office Department. It was calculated to put the 
publisher upon his guard, and it is possible that when your subsequent inquiry 
was made, however thorough and conscientious it may have been, he had adopted 
measures which effectively concealed past practices. Indeed, subsequent inqui- 
ries by the postmaster and inspectors seem to have developed this to have been 
true. 

This is a case in which, among other things, the revenues of ttie Government 
are involved to the extent of $80,000 between April, 1906, and the present date, 
and calls for the most careful action. The interests of the Government, as well 
as the publisher, should be thoroughly safeguarded, «nd no evidence in the 
possession of the department which will tend either directly or indirectly to 
throw light on the case should be ignored. 

I desire nothing but a just and impartial report and will sustain you in 
making such a report, but I do not feel that, in the absence of a further state- 
ment from you in response to the questions raised in this memorandum, I would 
be warranted in approving your action. 

Geo. B. Cortelyou, 
Postmaster General, 

Hon. Edwin C. Madden, 

Third Assistant Postmaster General, 



THIRD ASSISTANT POSTMASTER GENERAL^ LETTER OF MARCH 2, 1907, 
FURTHER REVIEWING CASE OF THE WOMAN'S MAGAZINE AND THE 
WOMAN'S FARM JOURNAL, AND MAINTAINING POSITION TAKEN IN 
LETTER OF FEBRUARY 7. 

Response to Inquiries Concerning Section I of the Report of the Third 
Assistant Postmaster General. 

March 2, 1907. 
Gen. Cortelyou: 

The following is the response called for by your memorandum of February 13, 
1907, on the case of the Woman's Magazine and the Woman's Farm Journal, 
of St. Louis, Mo., and grows out of the inquiries you propound to me concerning 
the decision which I rendered on the alleged excess mailings of those publica- 
tions in response to your letter of instructions of April 14, 1906, which was 
quoted in my decision. It is perfectly patent that there is a misconception. To 
make the matter clear I must here impress upon you, with all the force and 
emphasis in my power, that in this case the question before this office was the 
question of the numerical excess of copies mailed by this publisher over the 
copies which he is legally entitled to mail at the pound rate, assuming that he 
has an unquestioned second-class privilege. The question of whether he is 
entitled to that privilege is a distinct question by itself and yet undecided. An 
adverse position upon this latter question of the second-class privilege (to be 
dealt with in Section II of my report) would foreclose and put an end to any 
discussion as to the mailing of excess copies, because there is no such thing 
as excess mailings by a publisher who is not entitled to the second-class privi- 
lege at all. If this distinction, which is fundamental, is steadily borne in mind, 
most of the inquiries which are embodied in your memorandum resolve them- 
selves away. 

Upon the question of excess the sole inquiry to be entered into is that of 
whether the copies actually mailed exceeded in number the persons properly 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 65 

carried by the publisher as subscribers plus a number of sample copies equal 
thereto. In pursuing this inquiry the final test is one that was applied in this 
case, namely, that of determining by actual count the precise number of sub- 
scriptions of all recognized classes on the precise dates that the alleged excess 
mailings appear to have been made. This definite numerical inquiry is wholly 
distinct from the general continuing inquiry into the design for which the 
publications are conducted and whether they have legitimate lists of subscribers. 

You will recall that after the receipt of your letter of April 14, 1906, I went 
to you and stated how I looked upon this case and how much it involved, and 
1 then asked you, because of all the circumstances, that I be not required to take 
the case. You. however, insisted. Later on, when the Postal Commission was 
appointed to consider the whole second-class mail problem and it became ap- 
parent that I should have to devote my time largely to the work of preparing 
the department's case for that commission, and that I should have te devote 
other time to the public business growing out of the appointment of that com- 
mission, I again went to you and begged that you turn this case over to As- 
siM ant Attorney General Goodwin, or to some one else. You did not relieve 
me; hence. I was in duty bound to do the best I could with it. 1, of course, 
treated it under the rules and practices of this bureau, except in the case of 
the examination and count of the subscription ord«rs, etc., at the place of 
publication. 

The real question is, first, whether I am right in holding that the question 
of excess mailings is a matter of totals, and whether in determining that 
question subscriptions which have expired may lawfully be carried for the 
period which I allowed them to be carried. There can be in the department 
no dispute as to the facts from which those inferences were drawn, because 
the facts were found by an impartial commission sent out for the purpose. 
If, therefore, there be any doubt in your mind as to whether I have drawn 
the correct inferences from those facts as a matter of law, then the whole 
question can easily be solved. I am informed, and I assume that my informa- 
tion is correct, that Mr. Lewis is under indictment in one of the St. Louis 
courts for fraudulently mailing the precise copies here said to be in excess. 
His guilt or innocence depends upon the same facts which have been ascertained 
by the commission of this department. Submit to that court those facts and 
permit the court to draw the necessary inferences from them in deciding the 
question of his guilt or innocence. It is perfectly conceivable that the court 
may draw inferences differeut from those which I have drawn. 

In order to get this matter clearly before you in the exact light which I con- 
ceived it to be before me, it is necessary to now place in this record copies of 
certain correspondence. It will show you the basis for some of my conclu- 
sions, and that the questions which you propound in your memorandum are 
largely based upon a wrong hypothesis. I have often stated that this second- 
class refoinn is a delicate and difficult matter, and one which is intensely irri- 
tating to all publishers, because all are affected, some, however, more vitally 
than others, and that the reform could hope to succeed only if it were sound 
in morals as well as in law ; and that the law itself could not be the only guide. 
What was right to be done must have weight. We were not executing a new 
and untried statute. We were undertaking to stop wrongful practices which 
had grown up under lax methods, for which administration is at fault, and 
which seemed to give these practices legal sanction. Therefore, those practices 
have not been regarded as immoral, much less criminal. Capital had been 
invested on the faith of that sanction, and we could not proceed harshly and 
inconsiderately of the equities of the situation. That was the spirit in which 
1 recommended to you that Congress be asked at the last session to appoint a 
Postal Commission to look into the whole subject, and find if it was not now 
due, in the interest of the Government and publishers, that we have a new and 
modern law. True it is, that the statutes will stand much mere in the way 
of construction and reform, but we were due in fairness, before going on, to 
try to get a new law rather than forge ahead heedless of the havoc which would 
be wrought. 

I have all along been in the dark as to who was directing the work in this 
case. Your letter of April 14, 1906, placed upon me the duty of determining 
certain questions involved therein. I, of course, understood that they were 
to be handled according to the practices in the bureau of the Third Assistant . 
Postmaster General. I was to decide an appeal between the publisher on the 
one hand and the postmaster on the other. 

83534°— 11 5 



66 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



Under date of November 11, 1905, the postmaster addressed the following 
letter to me It sets forth his reasons for believing that the Woman's Maga- 
zine and the Woman's Farm Journal were abuses of the second-class privilege : 

" I beg leave to state that the records of this office show as follows, relative 
to the issues of the Lewis Publishing Co., of this city, viz, the Woman's Maga- 
zine and the Woman's Farm Journal : *,*+«. 

" First That the Woman's Magazine is being mailed as second-class matter 
on a waiver of third-class postage (made during the incumbency and on the 
recommendation of my predecessor) dated August 22, 1902, and that no regular 
second-class permit (as usually issued) has ever been granted the publishers. 

" Second. That the Woman's Farm Journal was duly entered as second-class 
matter December 2, 1891. 

" The department's reason for neither granting the usual permit for second- 
class privilege for the Woman's Magazine, or denying same, has never been 
communicated to me. 

" If my silence in the matter is capable of being construed as a concurrence 
with the views of my predecessor, and is being at all depended upon as a reason 
for the continued nonaction of the department as above referred to, I am led to 
sav that by reason of information recently acquired, I think it proper to express 
mv conviction that not only the Woman's Magazine, but the Woman s Farm 
Journal as well, are both being mailed in abuse of the privileges to which 
second-class matter is entitled, and to an extent which justifies at least an 
immediate and searching investigation of the whole matter, if not an absolute 
denial of the second-class privileges to both publications. 

" Mv conviction, as above stated, is founded in part on reports to me made 
bv mv superintendent of mails, who had information that the October issue of 
the Woman's Farm Journal was mailed to regular subscribers in white 
wrappers and the sample copies in manila wrappers. 

" The weights of this mailing were as follows : 



1. White wrappers 

2. Manila wrappers 

3. Blue (expirations) wrappers 

4. Manila, as samples 

Total 



Pounds. Copies 



31,271 

28, 986 
7,651 
60,563 



128, 471 



156,355 
144, 930 
38.255 
302,815 



642,355 



Five copies to the pound. 



" Responses to inquiries by me made of postmasters at offices of addresses 
included in the second item above stated (manila, 144,930 copies) not only 
sufficiently verify the information given to my superintendent of mails (as 
mentioned), but also indicate that the copies in manila wrappers were syste- 
matically addressed to nonsubseribers, were not marked sample copies, and 
were apparently used to justify the mailing of the admittedly sample copies 
covered bv fourth item in foregoing statement. 

"I had hoped to confirm my convictions as related to the October issue by 
a similar test of the November issue, but find my efforts were thwarted by 
the fact that the manner of wrapping (in different colored wrappers) has been 
changed, and the entire November issue is in manila wrappers of one color. 

" This mailing, just completed, has been made as follows : 



For subscribers.... 
For sample copies. 



Total. 



i Five copies weigh 18 ounces. 



Pounds. I Copies. 



65, 034 

60, 178 



125,212 



333, 300 
308, 412 



641,712 



" from which it will be seen that the total November issue is about the same 
as that for October, the assumption being warranted that the copies for regular 
subscribers, which in October were in white wrappers, are now in manila wrap 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 67 

pers, and that the copies represented by October item No. 2 (28,986 pounds, 
144.030 copies), then mailed as for regular subscribers, are again so mailed in 
November and used as part of the quantity to justify the sample-copy mailing. 

" There is but one conclusion to be drawn from the sudden change in the 
wrapping of the November issue, viz, that it was an effort to prevent, or inter- 
fere with, an investigation of real conditions. 

" While like inquiries can and will be made by me of postmasters touching 
the legitimacy of the November issue, yet, because of the altered style of mail- 
ing, it will make an arrival at true conditions more difficult, but my opinion is 
that it presents a reason for immediate and decisive action on the part of the 
department to compel the publishers to submit to an investigation rather than 
to allow them to further thwart one. 

" My belief is that a fair showing of the lost revenue on the November mail- 
ing of the Woman's Farm Journal is found in the following pro forma bill, 
based on the white and blue wrappers mailed in October : 

Pounds. 
Due on copies of legitimate mailings (see 

October white wrappers) 31,271 

Due on copies of legitimate expirations 

(see October blue wrappers) 7,651 



Total legitimate mailings 38, 922 

Due on sample copies, one for each legiti- 
mate subscriber 38, 922 



Total 77.844 at 1 cent $778.44 

Due on balance of November mailing 125, 212 

Less above mentioned ■. 77, 844 

Net 47,368 

At 5 copies weighing 18 ounces 242,761 copies, at 1 cent— 2,427.61 



Total due on November mailing 3, 206. 05 

Amount paid on November mailing 1,252.12 



Leaves difference of (loss to Government) 1,953.93 

" From what slight investigation I have been able to make of the mailings 
of the Woman's Magazine, indications are that similar conditions exist as 
affecting that magazine, and in my opinion a thorough investigation will show 
a pro rata loss to the Government on that publication. 

" For the reasons above stated and because I deem it my duty to no longer 
remain silent in this matter, I have made this report, and ask for instruc- 
tions as to further action prior to the next mailings of these publications. 

" The inspectors have made various inquiries of me touching the case, from 
which I assume that additional ^acts can be obtained by inquiry made to the 
honorable chief inspector. 

" The Woman's Magazine begins its mailing on the 20th of each month, and 
the Woman's Farm Journal about the 1st of each month, and early instructions 
will be necessary to prevent further loss to the Government in oonnection with 
the mailings of the next issues. 

" Very respectfully, Frank Wyman, Postmaster." 

The foregoing letter was referred to you on November 23, 1905, with the 
following memorandum : 

" I have the honor to hand you herewith a letter from the postmaster at 
St. Louis, dated November 11, on the cases of the Woman's Magazine and the 
Woman's. Farm Journal, published in that city. 

" It appears that the postmaster has instituted — apparently on his own mo- 
tion — an investigation with regard to these two publications, and on the result 
he ventures the opinion that both are abuses of the second-class mailing 
privilege. 

" My views with regard to the status of these publications have already been 
made known <to you in several other memoranda. In reply you directed that 
the two cases should take their course in the class to which they belong; and 
that accords with my own view as to what is best to be done. 

" As a part of his procedure the postmaster has caused inquiries to be made 
by other postmasters to ascertain whether or not persons to whom copies of 



68 EEL.EF OF THE LEWIS PUBLISHING COMPANY. 

the publications have been mailed are subscribers in fact. This is the only- 
instance of record where a postmaster has taken such action. A copy of the 
postmaster's form of inquiry is attached. 

" I do not consider it best for me to take any action on this letter from the 
postmaster until you have seen it and determined what, under the unusual 
circumstances, should be done with regard to it. Please direct me. 
" Respectfully, 

" Edwin C. Madden, 
" Third Assistant Postmaster General.** 

You did not give me any instructions in response to that memorandum. 

On March 15, 1906, the postmaster wrote me the following letter : 

" On November 11 last, I advised you by letter fully of the alleged abuse of 
second-class privileges by the Woman's Farm Journal and the Woman's Maga- 
zine, publications of the Lewis Publishing Co., of this city, requesting instruc- 
tions as to what action I should take prior to the next mailing of these pub- 
lications to prevent further loss to the Government in connection with their 
mailings. I have received no response to this letter. 

" In the meantime, there are being held, under instructions of the post-office 
inspectors and United States attorney of this district, 65,851 pounds of the 
October issue of the Woman's Farm Journal, mailed October 5 to 11, inclusive, 
1905, aggregating about 300,727 copies. 

" Later, about December 1, E. G. Lewis and other officers of the Lewis Pub- 
lishing Co. were indicted and charged with conspiracy to defraud the United 
States out of large sums of money, and in pursuance of said conspiracy, with 
mailing, during October, 1905, 300,727 copies of the October issue of the Woman's 
Farm Journal, aggregating in weight 05,784 pounds, in excess of the number 
of copies and pounds which they were legally entitled to transmit through the 
mails at the rate of 1 cent per pound. 

" They are also charged with the mailing, in pursuance of said conspiracy, 
during the same month, of issues of the Woman's Magazine for November, 
1905, 539,308 copies of said publication, aggregating in weight 107,682 pounds, 
in excess of the number of copies and pounds which they were legally entitled 
to transmit through the mails at the rate of 1 cent per pound. 

" I reported this matter to you under instructions in section 456, Postal Laws 
of 1902, paragraph 6, with the desire of being instructed as to the treatment 
of, and the postage that should be collected on, future mailings of these pub- 
lications. It has now become important that I be promptly advised as to what 
postage should be required on the copies of the publications being held in this 
office mailed in excess of the number the publishers were legally entitled to 
mail at the rate of 1 cent per pound, assuming, as a basis of your instructions, 
that the number charged was mailed in excess of legitimate mailings." 

The foregoing communication was transmitted to you on March 17, 1906, with 
the following letter : 

" I have the honor to hand you herewith a letter just received from the post- 
master at St. Louis, Mo. It relates to the Woman's Farm Journal and the 
Woman's Magazine, of that city, and complains that a former letter dated 
November 11 last has not been replied to. 

" Owing to the unusual circumstances and the fact that the case of these 
publications did not originate with, and is not being treated by, the Third 
Assistant Postmaster General, I referred the letter of November 11 to you with 
a request for instructions. You issued none. 

" In the letter submitted herewith, dated March 15, the postmaster calls atten- 
tion to the November 11 letter, and states that he is still holding the 65,851 
pounds of the October issue of the Woman's Farm Journal. 

" For the same reasons stated in connection with the reference of the first 
letter, I shall take no action upon this letter of March 15 until I receive instruc- 
tions from you ; but I deem it proper to invite your attention specially to the 
last paragraph, from which it might be inferred that specific instructions were 
issued by this office. Such is not the fact. None were issued. The postmaster 
appears to be acting under instructions in the Postal Laws and Regulations 
(sec. 456, especially par. 6), and such others as may have been issued to him 
by other officers." 

Under date of March 19, 1906, the chief post-office inspector, by indorsement, 
as follows : 

"Respectfully referred to Third Assistant Postmaster General (Classification 
Division), with request that proper action be taken. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 69 

" E. G. Lewis Publishing Co., St. Lonis, Mo. : Transmitting communication 
from the inspector in charge at St. Louis, Mo., in which he requests that the 
postmaster at St. Louis, Mo., be instructed that the Legal rate chargeable on 

publications mailed in excess of the number to which the publishers ;ire entitled 
is 1 cent per copy (or each 4 ounces) when sent to a single address, etc." 
transmitted to me the letter therein referred to, dated March 15, 1906, which is 
as follows: 

" In the indictment against Lewis for conspiracy to defraud the United 
States it is charged that, in pursuance of a conspiracy, he and others mailed 
dming the month of October 300,727 copies of the October issue of the Woman's 
Farm Journal, aggregating in weight 05,784 pounds, in excess of the number of 
copies and pounds which the publishers were legally entitled to transmit through 
said mails at the rate of 1 cent per pound. It is further charged that during 
the same month they deposited 539.30S copies of the November issue of the 
Woman's Magazine, aggregating in weight 107,682 pounds, in excess of the 
number of copies and pounds which they were legally entitled to transmit 
through the said mails at the rate of 1 cent per pound, the offense charged being 
conspiracy to defraud the Government out of the difference in postage on the 
excess mailings between 1 cent per pound and 1 cent per copy (5 to the pound), 
or for each 4 ounces, when sent to a single address. 

" It is necessary in the prosecution of the case to show that the postage on 
these excess mailings required by the department to be paid (assuming we 
prove a mailing in excess of the number to which the publishers are entitled) 
is 1 cent per copy, or for each 4 ounces when sent to a single address. 

" In the preparation for trial by Inspectors Sullivan, Stice, and Reid, involv- 
ing a careful examination of the postal laws on this point, it develops that 
there is an apparent failure to specify the exact course to be pursued by (the) 
postmaster in the way of collection of postage on abuse such as the one now 
in court. Paragraph 5 of section 456, Postal Laws, states in substance that the 
postage of 1 cent for each 4 ounces is required on extra copies sent by the 
publisher when acting for an advertiser or purchaser, or where he issues a large 
edition containing an article intended to advance private interests, or where 
advertisements were secured under an agreement to distribute a given number 
of copies in excess of number of subscribers. It has apparently been left to 
paragraph 6 to deal with such cases as the one now at court, where a publisher 
is mailing as sample copies a larger number than actually subscribed for 
in order to maintain a given circulation, and is continuously mailing them in 
excess of 100 per cent of the number issued to regular subscribers, and this par- 
agraph provides that copies shall be detained until the facts as to whether the 
publication is primarily designed for advertising or free circulation are ascer- 
tained, and the postmaster is instructed to promptly report the case to the Third 
Assistant Postmaster General. There is an absolute silence as to what postage 
is chargeable on these excess mailings described in paragraph 6. Postmaster 
did report these facts November 11, 1905, to the Third Assistant Postmaster 
Genera], but received no reply. 

"As you know, under the suggestion of the United States attorney and the 
directions of this office, the postmaster here is holding, as evidence, 65,851 
pounds of sample copies of the October issue of the Woman's Farm Journal, 
mailed in excess of those actually subscribed for in order to maintain a given 
circulation, a portion of which publications being held are so marked ' sample 
copies.' The item consists of 38,865 pounds marked ' sample copies ' and 28,986 
pounds sample copies not so marked. The legitimate mailings of that issue, 
including one sample copy for each legitimate subscriber, was 61,S31 pounds. 
The copies being held were mailed in excess of the number of legitimate sub- 
scribers, including sample copies, last given. 

" What the attorney will need as evidence through the postmaster will be the 
postmaster's testimony to the effect that the legal rate chargeable on these pub- 
lications mailed in excess of the number to which the publishers were entitled 
is 1 cent per copy (or for each 4 ounces) when sent to a single address. The 
postal laws being silent on that direct proposition, it is necessary that he be 
instructed by the proper officer of the department either to that effect directly 
or to the effect that the same postage is applicable as is required under para- 
graph 5 of section 456, postal laws, which refers to abuses of similar character. 
I have requested the postmaster to this day make this inquiry direct to the 
Third Assistant Postmaster General, and it is desired that you take the matter 
up with the proper officer, that such instructions may be given the postmaster 



70 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

as is necessary to enable him to properly act and testify on a matter not made 
clear by the existing regulations." 

In accordance with my previous action, this communication was referred to 
you on March 22, 1906, with the following memorandum : 

" For reasons given in previous memoranda all correspondence in relation to 
the cases of the Woman's Farm Journal and Woman's Magazine, of St. Louis, 
which reached this office have been submitted to you with the request that, if 
you wished me to take any action, you would so direct. This has been due to 
the fact that the cases have not arisen, nor have they been handled by this 
bureau, and I felt it important not to complicate or confuse the action of an- 
other officer in regard to the cases by any action of mine. In response to none 
of these memoranda and letters referred have you given me any instructions. 

" I am now in receipt of a letter from the inspector in charge at St. Louis, 
referred to me by the chief post-office inspector, asking that the postmaster at 
St. Louis be instructed by me in regard to the rate of postage on certain copies 
of the Woman's Farm Journal now detained in the St. Louis post office. 

" In order that you may be advised fully of my action I hand you herewith a 
copy of the letter and reference and a copy of my reply addressed to the chief 
post-office inspector. In this connection I beg to draw your attention to my 
memoranda of November 23, 1905, and March 17, 1906. 

" If you desire that I issue any instructions direct to the postmaster, please 
inform me." 

The following is my reply to the chief post-office inspector, dated March 22, 
1906: 

" Your communication of the 19th instant, transmitting one from It. M. Ful- 
ton, inspector in charge at St. Louis, Mo., in regard to the Woman's Magazine 
and the Woman's Farm Journal, is received. 

" Inspector Fulton states that the postmaster at St. Louis reported to this 
office, under date of November 11, 1905, certain excessive mailings of the pub- 
lications in question, and asked to be instructed in the matter, and that the 
postmaster, under date of March 15, called attention to the letter of November 
11 and renewed his request for instructions. The inspector further states that 
it will be necessary to submit as evidence in the prosecution of certain court 
cases of the Lewis Publishing Co. a statement showing the legal rate of postage 
chargeable on excessive mailings of a publication admitted as second-class 
matter. 

" No reply was sent to the postmaster at St. Louis in response to his letter 
of November 11. Owing to the unusual circumstances of the case, the letter 
was submitted to the Postmaster General, and his instructions were asked be- 
fore any action should be taken by this office. The Postmaster General gave 
no instructions. The letter of the postmaster dated March 15 has, for the same 
reasons, also been submitted to the Postmaster General, and this office is 
awaiting his instructions before proceeding. 

" Regarding the rate of postage chargeable on excessive mailings of sample 
copies of a publication admitted as second-class matter, you are informed that 
the rule of the department is laid down in paragraph 12 of Circular III, appear- 
ing on pages 1040-1041 of the January, 1905, Postal Guide, which reads as 
follows : 

"'12. If sample copies in excess of the number hereinbefore specified (see 
paragraph 10) be presented for mailing, they are not entitled to the pound rate 
of postage. They are chargeable with the transient second-class rate of one cent 
for each four ounces or fraction thereof, to be prepaid with stamps affixed, on 
each separately addressed copy or package of unaddressed copies.' 

" The foregoing rule is grounded upon the theory that when a publisher pur- 
ports to send more sample copies than he is entitled to as publisher, he ceases 
to send them as such publisher and they cease to be sample copies and are sub- 
ject to the provision of law establishing the rate on newspapers and periodical 
publications of the second class when sent by other than the publisher or 
news agent. (Act of June 9, 1884, ch. 73; 1 Supp. R. S., 438; sec. 455, P. L. 
and R. See, also, sec. 448, P. L. and R.) This rule charging the transient 
second-class rate upon excess sample copies is applied in cases where prima 
facie such excess mailing is not sufficient of itself to indicate that the publica- 
tion should be excluded from the second-class rate by reason of its being ' de- 
signed primarily for advertising purposes, or for free circulation, or for circu- 
lation at nominal rates.' Where the mailing of such sample copies is, however, 
sufficient to justify that inference, the practice is not to make any different 
charge for the excess sample copies, but to determine that the publication itself 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 71 

is not entitled to the second-class rates at all, and that all copies, in consequence, 
must be charged the third-class rate. Whether the excess sample copies in the 
case in question, therefore, are chargeable at the pound rate, at the transient 
secoml-dass rate, or at the third-class rate depends upon the solution of the 
following matters of fact: 

44 First. Whether such copies are in fact in excess of 100 per cent of the 
copies actually circulated as to subscribers within the regulations of the depart- 
ment. If not in excess of 100 per cent, they are chargeable at the pound rate; 
if in excess, they are chargeable at the transient second-class rate or the third- 
class rate, dependent upon the answer to the second question. 

44 Second. Whether or not such excess sample copies are, either standing alone 
or in combination with other relevant facts, sufficient to indicate that the pub- 
lication is 4 designed primarily for advertising purposes or for free circulation 
or for circulation at nominal rates.' If the facts in the possession of the post- 
master are sufficient to justify the conclusion that these copies are in fact in 
excess of 100 per cent of the copies which the. publisher is entitled to send as 
to subscribers, then it is the duty of the postmaster to charge upon such excess 
the transient second-class rate. The facts necessary for this conclusion are 
not before this office, and no decision thereon has been made. 

44 Third. If in addition to finding that the copies are in fact excess copies it is 
also found that such excess copies are" sufficiently numerous, in the judgment 
of the postmaster, to justify the inference that the paper is 4 designed primarily 
for advertising purposes, or for free circulation, or for circulation at nominal 
rates,' then those facts should be laid before the department, in order that a 
hearing upon them, required under the act of March 3, 1901 (ch. 851, 31 Stat. 
L., 1107, sec. 444, P. L. & R.), may be had for the determination of the funda- 
mental question whether the publication itself is entitled to the second-class 
mailing privilege at all. 

44 While the postmaster may not deny the second-class mailing privilege to a 
publication except upon a determination to that effect by the department after 
a hearing, it is his duty, assuming the right to that privilege, to charge the 
lawful rate upon every copy passing through his hands. Therefore, if the 
postmaster has before him facts which, in his judgment, justify his determining 
these copies to be subject to the transient second-class rate, he should notify 
the publisher of that fact and demand that such rate be paid before trans- 
mission. 

44 Both letters of the postmaster (that of Nov. 11, 1905, and that of Mar. 15, 
190G), having been, as heretofore stated, submitted to the Postmaster General 
and his instructions asked, it is not deemed advisable for this office to instruct 
the postmaster in advance of receiviug the Postmaster General's directions." 

You will note that up to this date, as my memorandum of March 22 states, 
I had received no instructions from you, and I felt it my duty to answer the 
post-office inspector in charge through the chief post-office inspector. On 
March 22, 1906, you issued to me the first Instructions in the case in the fol- 
lowing letter : 

44 The letter addressed to yoi> by the postmaster at St. Louis, Mo., under 
date of March 15, to which was attached your communication to me of March 
17, is herewith returned. 

44 You will please inform the postmaster at St. Louis, in response to his in- 
quiry, of the amount of postage which should be collected on copies of the 
Woman's Magazine and the Woman's Farm Journal, now withheld from trans- 
mission by him as being in excess of the number of copies which the publishers 
are legally entitled to transmit at the second-class rate of postage, assuming 
as the basis of your instruction to the postmaster that the number of copies 
of each publication charged by him as having been mailed in excess of that 
authorized by law is correct. 

44 It is requested that your letter of instructions to the postmaster at St. 
Louis be submitted to me before transmission." 

In response to the foregoing letter I prepared instructions to the postmaster. 
In compliance with your direction I submitted my letter of instructions to you 
for approval before transmission. It was as follows : 

44 Your letter of March 15, in which you call attention to a letter dated No- 
vember 11, 1905, to which you received no answer, is received. 

44 You are informed that your letter of November 11 was referred to the 
Postmaster General for his consideration. No action was therefore taken by 
this office. 

44 In response to the inquiry contained in your letter of March 15 respecting 
the postage which should be collected on 300,727 copies of the October, 1905, 



72 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

issue of the Woman's Farm Journal, aggregating in weight 65,784 pounds, 
withheld from transmission by you as being in excess of the number of copies 
which the publishers are legal I. entitled to transmit at the pound rate of post- 
age, and 539,308 copies of the November, 1905. issue of the Woman's Maga- 
zine, aggregating in weight 107,682 pounds, stated to be in like manner in 
excess of the number of copies which the publishers are entitled to transmit at 
the pound rate, you are informed as follows : 

"Assuming, as matter of fact, that the copies withheld from transmission 
in the one case and mailed in excess in the other are copies in excess of the 
number which the publishers are entitled to mail at the pound rate of postage, 
as stated in your letter, then, unless such excess is great enough to establish 
that the publication is ' designed primarily for advertising purposes, or for 
free circulation, or for circulation at nominal rates,' and thus exclude the pub- 
lication from the second class altogether, a matter which can be determined 
only after a hearing before this bureau under the act of March 3, 1901 (ch. 
851, 31 Stat. L., 1107; sec. 444, P. L. & R.), such excess copies are chargeable at 
the rate of 1 cent for each 4 ounces or fraction thereof, prepaid by stamps 
affixed." 

You returned that letter to me with Instructions to eliminate from the last 
paragraph the following: 

"Unless such excess is great enough to establish that the publication is 
' designed primarily for advertising purposes, or for free circulation, or for cir- 
culation at nominal rates,' and thus exclude the publication from the second 
class altogether, a matter which can be determined onlv after a hearing before 
this bureau under the act of March 3, 1901 (ch. 851, 31 Stat. L., 1107; sec. 444, 
P. L. & R.)." 

The letter issued by me to the postmaster under date of March 30, 1906, there- 
fore read as follows : 

" Your letter of March 15, in which you call attention to a letter dated Novem- 
ber 11, 1905, to which you received no answer, is received. 

" You are informed that your letter of November 11 was referred to the Post- 
master General for his consideration. No action was, therefore, taken by this 
office. 

" In response to the inquiry contained in your letter of March 15, respecting 
the postage which should be collected on 300,727 copies of the October, 1905, 
issue of the Woman's Farm Journal, aggregating in weight 65,784 pounds, with- 
held from transmission by you as being in excess of the number of copies which 
the publishers are legally entitled to transmit at the pound rate of postage, and 
539,308 copies of the November, 1905, issue of the Woman's Magazine, aggre- 
gating in weight 107,682 pounds, stated to be in like manner in excess of the 
number of copies which the publishers are entitled to transmit at the pound 
rate, you are informed as follows: 

"Assuming, as matter of fact, ,that the copies withheld from transmission in 
the one case and mailed in excess in the other are copies in excess of the num- 
ber which the publishers are entitled to mail at the pound rate of postage, as 
stated in your letter, then such excess copies are chargeable at the rate of 1 
cent for each four ounces or fraction thereof, prepaid by stamps affixed." 

It appears that the elimination of the words above quoted was due to the 
opinion given you by Assistant Attorney General Goodwin under date of March 
28, 1906. 

Under date of April 2, 1906, the postmaster addressed the following letter to 
the Third Assistant Postmaster General, he apparently having found my letter 
of instructions insufficient to meet the situation: 

" I have your letter of March 30, in response to my inquiry of March 15, 
bearing on the matter of postage that should be collected on excess copies of 
the Woman's Farm Journal and Woman's Magazine mailed in October last by 
the Lewis Publishing Co. 

" The last paragraph of your letter reads : 

" 'Assuming, as matter of fact, that the copies withheld from transmission in 
the one case and mailed in excess in the other are copies in excess of the number 
which the publishers are entitled to mail at the pound rate of postage, as stated 
in your letter, then such excess copies are chargeable at the rate of 1 cent for 
each 4 ounces or fraction thereof, prepaid by stamps affixed.' 

"As the above instructions appear to relate solely to the October mailing, I 
again write you for instructions as to how to proceed in connection with future 
mailings of the Magazine and Farm Journal, assuming that the same conditions 
exist as to the mailings of a large number of copies of each publication in 
excess of the legitimate mailings. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 73 

"My attention was directed on March 28, in a joint conference with the 
United States attorney and the post-Office inspectors, to a letter from yon ad- 
dressed to Chief Inspector Vickery, date of March 22, 1006, in which yon staled 
among other things: 

"'While the postmaster may not deny the second-class mailing privilege to a 
publication except upon a determination to that effect by the department after 
a hearing, it is his duty, assuming the right to that privilege, to charge the 
lawful rate upon every copy passing through his hands. Therefore, if the post- 
master has before him facts which, in his judgment, justify his determining 
these copies to be subject to the transient second-class rate he should notify 
the publisher of that fact and demand that such rate be paid before trans- 
mission.' 

"The conclusion was reached in this conference that it was my duty under 
the instructions embraced in the above paragraph to notify the Lewis Publish- 
ing Co. of my intentions to demand the 1 cent for each 4 ounces postage on 
excess mailings of the future issues of its publications, and I would consider it 
my duty to do so had these instructions been addressed to me. 

" The next issue of the Farm Journal will begin mailing within a few days, 
and the mailing of the Magazine will begin about the 20th instant. Without 
waiving my views, as expressed in a letter to your office November 11, to the 
effect that I challenged the right of these publications to further second-class 
privileges, I would state that it is my desire in the meantime, while this ques- 
tion is being settled, to protect the revenues of the Government as far as 
possible by collecting from the publishing company the proper transient second- 
class postage for excess mailings of their papers. 

"At an early date I would be pleased to receive such orders from you in this 
respect as will bring about this result, and I will act upon them, as I am 
satisfied that in the future mailings of these publications the same attempt 
to defraud the revenues of the Government will be made, and in the same 
manner as was practiced by them last October and has been regularly since 
that date." 

Responding to this letter, instructions dated April 6, 1906, were sent to the 
postmaster from this office, not, however, until they had been submitted to you 
for approval with a memorandum dated April 4, 1906. You returned the letter 
and the memorandum marked, " O. K., G. B. C." The letter read : 

" In answer to your letter of April 2, on the subject of the Woman's Farm 
Journal and Woman's Magazine, published by the Lewis Publishing Co., you 
are informed that the direction that copies found to be in excess of those 
which the publishers are entitled to mail at the pound rate of postage are 
chargeable at the rate of 1 cent for each 4 ounces or fraction thereof, pre- 
paid by stamps affixed, applies, obviously, to all excess mailings whether they 
be of the issue of October or any other month. The inquiry made by you was 
as to a particular number of copies of particular issues, and it was answered 
accordingly. Inasmuch, however, as it is the duty of the postmaster to charge 
the lawful rate upon all mail matter passing through his hands, it would be 
your duty, whenever the facts before you justify you in holding that the 
copies are in fact excess* copies, to charge upon such excess the rate I have 
already mentioned, namely, the transient second-class rate. 

" With respect to your statement that you challenge the right of these publi- 
cations to further second-class privileges, you are informed that you should 
set out in a report all the facts upon which your challenge is based in order 
that proper action may be had by this office under the act of March 3, 1901. 

" It is a part of the postmaster's duty to lay before this office any facts within 
his knowledge which tend to show that any publication mailed at his office is 
not entitled to the second-class mailing privilege. Such report should be de- 
tailed and should be accompanied by a statement of the evidence by which it 
may be supported in case a hearing may be decided upon." 

Merely as indicating the regularity with which I submitted to you everything 
concerning the Lewis case which came to my notice, or which called for any 
action on my part, prior to April 14, 1906, when the case was tinned over to me, 
I quote the following memorandum sent you April 13, 1906, which was returned 
to me marked " O. K., G. B. C." : 

" In accordance with my practice of bringing all matters in relation to the 
Lewis publications of St. Louis to your attention, I beg to hand you herewith a 
letter from Mr. Shepard Barclay, of St. Louis, making inquiry in regard to the 
Postal Laws and Regulations, edition of 1902, and other matters, and also my 
reply thereto. If the reply meets with your approval, I will forward it." 



74 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

My reply to Mr. Barclay, referred to in the foregoing memorandum, and 
wliich was sent under date of April 17, 1906, read: 

" In reply to your letter of the 9th instant, I have to say that the 1902 edition 
of the Postal Laws and Regulations is the latest. There is no prescribed form 
or manner of appealing from a ruling of a local postmaster on the postage 
charges exacted by him. Postmaster Wyman, at St. Louis, is probably acting 
under the instructions from this office found on page 1041 (par. 12) of the 
January, 1905, Postal Guide, as follows: 

" 'If sample copies, in excess of the number hereinbefore specified (see par. 
10), be presented for mailing, they are not entitled to the pound rate of 
postage. They are chargeable with the transient second-class rate of 1 cent for 
each 4 ounces or fraction thereof, to be prepaid with stamps affixed on each 
separately addressed copy or package of unaddressed copies.' 

" Paragraph 10, referred to, provides that the number of sample copies which 
may be mailed at the pound rate with any issue of a publication must not 
exceed the number of copies of that issue sent to subscribers." 

Under date of April 11, 1906, the postmaster addressed the following letter 
to the Third Assistant Postmaster General : 

" Referring to your letter of the 6th instant, in which you state, among other 
things, that it is my duty when satisfied copies of a publication are being 
mailed in excess of the regular number to which it is entitled at the pound rate, 
to collect the transient second-class postage on such excess, I will state that on 
the 6th instant, upon receipt of a like ruling from the Postmaster General, I 
notified the Lewis Publishing Co. that the transient second-class rate of postage 
would be required thereafter on all copies of the Woman's Farm Journal mailed 
in excess of their legitimate subscriptions, numbering 141,328, together with 
sample copies not to exceed that number, or a total mailed of 282,656. (See 
copy of letter herewith.) 

" On the 7th instant E. G. Lewis, president of this company, called at my 
office and stated it was his intention to appeal from my decision as to the 
number of his legitimate subscribers, and deposited with me $3,000 to cover 
postage at the rate of 1 cent per copy on the anticipated mailings of 300,000 
excess copies of the said journal. (Copy of Mr. Lewis's letter and of receipt 
given him herewith attached.) 

" The mailing of the excess copies of the Farm Journal was then begun, and 
has practically been completed. The mailing of the 282,656 had practically 
been completed at the time my notice was given. 

" Some five days have passed and Mr. Lewis has not submitted to me his 
papers bearing on the appeal, and it is deemed wise not to defer reporting the 
matter to you longer, and requesting that should Mr. Lewis forward his appeal 
and papers bearing thereon direct to you that you return same to this office, 
that I may be able to make an intelligent report and recommendation on the 
defense submitted by him. 

" In the absence of these papers I might state briefly for your information, 
in the meantime, that on November 11, 1905, I submitted quite a lengthy report 
to you, in which I stated, among other things : 

" ' That by reason of information recently acquired I think it proper to ex- 
press my conviction that not only the Woman's Magazine, but the Woman's 
Farm Journal as well, are both being mailed in abuse of the privileges to which 
second-class matter is entitled, and to the extent which justifies at least an 
immediate and searching investigation of the whole matter, if not an absolute 
denial of the second-class privileges to both publications.' " 

" I stated, further, my belief was that a fair showing of the lost revenue on 
the November, 1905, mailing of the Woman's Farm Journal amounted to about 
$1,953.93, and that, while because of a change of system of mailing effected by 
Lewis to thwart, if possible, a like investigation of the Woman's Magazine it 
was impossible to tell the exact loss of revenues in connection with that maga- 
zine, yet that, from what investigation I had made, the indications were simi- 
lar conditions existed as affecting the said Woman's Magazine, and that a 
thorough investigation would show a pro rata loss to the Government on that 
publication. I gave the figures and some facts upon which my conclusion was 
reached, and further stated that 'the inspectors have made various inquiries 
of me touching the case, from which I assume that additional facts can be 
obtained by inquiry made to the honorable chief inspector.' I stated that 
these publications would begin their next mailing at an early date, and asked 
for instructions as to further action prior to such mailing to prevent additional 
loss to the Government. Neither instructions nor reply were received from you 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 75 

on this matter until your letter of the 6th instant, which was received by me 
on the 9th. 

" I now report that the continued investigations, as made since November 
11 by this office and the inspectors, fully confirm my belief and conviction as 
then expressed, and I doubt not that the particulars of this investigation fully 
reported to the chief inspector by the inspectors handling the case can be made 
(or are) available for your information. 

" I intend to submit a notice to the Lewis Publishing Co. to-morrow, affect- 
ing the mailings of the excess copies of the Woman's Magazine similar in 
terms to the one submitted on the 6th instant affecting the Farm Journal. 

"The number of 141,328, as representing the legitimate subscriptions to the 
Woman's Farm Journal, and the number 539,901, as representing the legiti- 
mate subscriptions to the Woman's Magazine, are based on a count made of 
the current subscription-card records of these publications as kept and sub- 
mitted by Mr. Lewis, president of the company, which count was made by 
inspectors in conjunction with 54 trusted and experienced clerks from my 
office. The accuracy of this count has beeri confirmed by replies to inquiries 
made since by clerks in my office, who, from the monthly mailings of each pub- 
lication sent since October, 1905, have selected a representative list of names and 
addresses from the mailings thereof upon which to base these inquiries and to 
thoroughly and fairly test the legitimacy of the list. 

" That the legitimate list of subscribers reaches even the numbers above 
indicated is challenged, as recent developments show practically a thousand 
subscriptions obtained in one instance at the rate of 5 cents per annum, through 
names furnished by an advertiser interested in the circulation of the publica- 
tions for advertising purposes. This is representative of other like cases 
brought to our attention. Another illustrative case shows over 1.500 subscrip- 
tions obtained since January 1, 1906. by so-called clubbing arrangements with 
another newspaper, by which the Woman's Magazine is practically being sent 
gratis as a premium, the nominal rate of 5 cents per annum being charged. 

"This office is confident that it has facts and evidence to enable it to main- 
tain its position fully against any showing that the Lewis Publishing Co. may 
submit in connection with their appeal to your office. Further report will be 
submitted along the lines made necessary as soon as the claims of this company 
are received by me." 

The foregoing letter was submitted to you on April 14, 1906, with the 
following memorandum : 

" I hand you herewith a letter from the postmaster at St. Louis, under date 
of April 11, 1906, inclosing a copy of his letter of April 6 to the Lewis Publish- 
ing Co.. a copy of their reply, and a receipt given them for deposit ; also a 
letter of the postmaster at St. Louis, under date of April. 12, inclosing a copy 
of his letter of April 12 to the Lewis Publishing Co., and his supplemental letter 
of April 12. All of these were received to-day. 

" Inasmuch as these relate to the St. Louis case, all communications upon 
which I have heretofore sent you, I send these also for fear that any action of 
mine might complicate action contemplated elsewhere. 

" On April 6, 190G. I- wrote the postmaster informing him that copies in 
excess of those which the publishers are entitled to mail at the pound rate are 
chargeable at the second-class transient rate, and that it is his duty to charge 
the lawful rate upon all matter passing through his hands, and that if the 
facts justify the conclusion that copies were being mailed in excess of the 
publishers' privilege for his legitimate list of subscribers and an equal number 
of sample copies, he should charge upon such excess the transient second-cbiss 
rate of postage. The theory upon which the transient second-class rate is 
charged was explained in my letter of March 22, 1906, to the chief post-office 
inspector, and although that theory has never received judicial approval and 
may be regarded as doubtful, I deemed it best to adhere to it in instructions 
to the postmaster. 

"It appears from this correspondence that, acting under these instructions, 
the postmaster has notified the publishers that, having reached the conclusion 
that the legitimate subscriptions to the Woman's Farm Journal are not to 
exceed 141,328. and the legitimate subscriptions to the Woman's Magazine are 
not to exceed 539.901, that all copies in excess of 2^2 636 in the first case, and 
in excess of 1.079.802 in the second case, would be chargeable at the transient 
second-class rate. 

" From this ruling the postmaster informs me that the publishers have 
appealed, but that appeal has not yet been received in this office. Pending such 



76 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

appeal, and until the facts may be determined by the department, the ruling of 
the postmaster upon the evidence before him stands. There is, therefore, 
nothing at the present moment upon which this bureau can act." 

On the same date, April 14, 1906, you wrote me the instructions which for 
the first time placed the matter in my charge. Your letter is as follows: 

" The letter of E. G. Lewis and the accompanying statement of the Lewis 
Publishing Co., both of which are dated April 7 and inclosed herewith, have 
been transmitted to the Post Office Department by Hon. Jesse Overstreet, Mem- 
ber of Congress, to whom they are addressed. 

" It will be seen that in his letter Mr. Lewis complains that the postmaster 
at St. Louis has required the Lewis Publishing Co. to deposit with him an 
amount sufficient to cover the postage on copies of its publication entitled 
Woman's Farm Journal, which he believes to have been mailed in excess of 
the number legally mailable at the pound rate, and as president of that com- 
pany asks to be accorded a hearing upon the issue raised by the action of the 
postmaster. 

" You will please immediately institute an investigation for the purpose of 
determining whether the Woman's Farm Journal and the Woman's Magazine, 
issued by the Lewis Publishing Co., are entitled to second-class privileges; and, 
if so, what number of copies of each publication should be admitted to the mails 
monthly at the rate of 1 cent per pound. This investigation should be thorough 
and comprehensive, and in pursuance of it the company should be afforded 
early opportunity to be fully heard upon the questions involved." 

On April 17, 1906. you returned to me my memorandum of April 14, together 
with the letter of the postmaster dated April 11, to which it referred, with the 
following memorandum : 

" This would appear to be covered by my letter to you of the 14th instant, 
directing an investigation of the Lewis publications, in response to Mr. Lewis's 
appeal through Representative Overstreet." 

From April 14, 1906. therefore, the case was in the hands of the Third As- 
sistant Postmaster General, and I proceeded to deal with it according to the 
practices of this bureau in dealing with other publications in like situations, 
which I believed to be according to your instructions ; except that as the issue 
was drawn on the appeal which I was to decide, it was necessary to undertake 
such an investigation of the publisher's business, records, etc., as had never 
before been undertaken by the Third Assistant Postmaster General. 

It will be plain from the foregoing that prior to April 14, 1906. I was under 
the exceeding embarrassment of being unable to inform the postmaster in re- 
sponse to his repented letters as to the course to pursue, except in the two 
instances where le+ters of instructions were sent him by your direction. They 
are my letters of March 30. 1906. and April 6, 1906. 

The case now being in my charge I, on April 19. 1906, wrote the chief post- 
office inspector, the postmaster at St. Louis, and the Lewis Publishing Co., 
respectively, as follows : 

[To chief post-office inspector.] 

"As you may remember, the postmaster at St. Louis, Mo., under date of April 
11, advised this office that be bas determined, in the case of the Woman's Farm 
Journal, published by the Lewis Publishing Co., of St. Louis, that the legitimate 
list of subscribers to such publication numbers 141.328, and that he has held 
that the transient second-class rate would be required on all copies mailed in 
excess of such legitimate subscriptions, numbering 141,328, together with 
samples not to exceed that number, or a total of 2S2.656. 

"From the decision of the postmaster the publisher has appealed and depos- 
ited $3,000 to cover postage at the rate of 1 cent per copy upon anticipated 
mailings of 300.000 excess copies. The postmaster states that his decision was 
based upon the facts developed in the investigations made by his office and 
the inspectors of your division, and that the particulars were fully reported to you. 

"The Postmaster General having directed me to pass upon this appeal, I 
have to request that you will oblige me with the evidence referred to and any 
other evidence that may be in your office bearing upon the question as to the 
number of subscribers properly constituting the legitimate list, if any, of the 
Woman's Farm Journal. 

" Mr. Bacon, superintendent of the classification division, informs me that 
he spoke to you about this evidence yesterday morning, but was unable to 
obtain it. If it can not be given in its original form, copies will be sufficient. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 77 

"As the Postmaster General has directed this case to be taken up at once, 
an early reply is requested." 

[To the postmaster.] 

"Your letter of April 11, inclosing a copy of your letter of April 6 to the 
Lewis Publishing Co., a copy of their reply and of receipt given them for 
deposit, and your letter of April 12 inclosing a copy of letter of the same date 
to Lewis Publishing Co.. were all received and have been considered by this 
office and by the Postmaster General. 

"An investigation into the second-class privileges of the Woman's Farm Jour- 
nal and the Woman's Magazine is now being made by this office. It involves 
an inquiry into the number of copies of each publication which, so long as 
these publications remain in the second class, should be admitted to the mails 
monthly at the rate of 1 cent a pound. 

" In your letter of April 11 you state : 

" ' The number of 141,328, as representing the legitimate subscriptions to the 
Woman's Farm Journal, and the number 539,001 as representing the legitimate 
subscriptions to the Woman's Magazine, are based on a count made of the cur- 
rent subscription card records of these publications as kept and submitted by 
Mr. Lewis, president of the company, which count was made by inspectors in 
conjunction with 54 trusted and experienced clerks from my office. The 
accuracy of this count has been confirmed by replies to inquiries made since by 
clerks in my office who, from the monthly mailings of each publication sent 
since October, 1905, have selected a representative list of names and addresses 
from the mailings thereof upon which to base these inquiries, and to thor- 
oughly and fairly test the legitimacy of the list. 

" ' That the legitimate list of subscribers reaches even the numbers above 
indicated is challenged, as recent developments show practically a thousand 
subscriptions obtained in one instance at the rate of 5 cents per annum, through 
names furnished by an advertiser interested in the circulation of the publica- 
tions for advertising purposes. This is representative of other like cases 
brought to our attention. Another illustrative case shows over 1,500 subscrip- 
tions obtained since January 1, 1906, by so-called clubbing arrangements with 
another newspaper, by which the Woman's Magazine is practically being sent 
gratis as a premium, the nominal rate of 5 cents per annum being charged. 

" ' This office is confident that it has facts and evidence to enable it to main- 
tain its position fully against any showing that the Lewis Publishing Co. may 
submit in connection with their appeal to your office. Further report will be 
submitted along the lines made necessary as soon as the claims of this com- 
pany are received by me.' 

" You are accordingly requested to furnish this office at once, for considera- 
tion in such investigation and the appeal of the Lewis Publishing Co. from 
your ruling in the case of the Woman's Farm Journal, all the evidence referred 
to in the letter quoted, as well as all other evidence in your possession bearing 
upon the question as to the number of legitimate subscriptions to each of these 
publications, the number of sample copies mailed, and the excess over such 
legitimate list and samples. This evidence should reach me before Friday, 
April 27, on which date the publisher will be heard on his appeal from your 
ruling. 

" P. S. — If the originals of the evidence referred to can not for any reason 
be sent, please furnish copies." 

[To the Lewis Publishing Co.] 

" The ruling of the postmaster at St. Louis, dated April 6, concerning the ex- 
cess mailings of the Woman's Farm Journal, and the ruling of April 12 con- 
cerning excess mailings of the Woman's Magazine have been reported to this 
office with notice that you had appealed from the ruling in the case of the 
Woman's Farm Journal. Your letter to the Hon. Jesse Overstreet. with accom- 
panying statement, in which that appeal appears to be embodied, has also been 
received by this office. Although these latter papers can not in strictness be 
said to constitute an appeal to this office from the ruling of the postmaster, 
nevertheless they will be treated as such. 

"As a result of his investigations, the postmaster has found and determined 
that the legitimate subscriptions to the Woman's Farm Journal number not to 
exceed 141.328, entitling the publisher to mail samples not to exceed an equal 



78 RELIEF OE THE LEWIS PUBLISHING COMPANY. 

number, and that the subscriptions to the Woman's Magazine number not to ex- 
ceed 539,901, entitling the publisher to mail samples not to exceed that number. 

" With regard to your appeal from the ruling of the postmaster as to excess 
mailings, I have to inform you that the facts found by the postmaster will, in 
the absence of evidence to the contrary, be taken as prima facie correct. You 
will be accorded an opportunity at this office April 27 next, at 2.30 p. m., to 
present any and all evidence to the contrary which it may be your wish to lay 
before me for consideration in connection with your appeal. 

" In this connection you are also informed that the question of the right of 
these publications to second-class entry is in dispute." 

Under date of April 23, 1906, the chief post office inspector addressed me as 
follows : 

"Answering your letter of the 19th instant, I regret that I am unable to give 
you either the originals or copies of reports of inspectors bearing upon the 
circulation of the Woman's Farm Journal, of St. Louis. It is the custom of 
this office whenever an indictment has been returned in a matter which has 
been investigated by post-office inspectors to intrust the entire case to the De- 
partment of Justice. Following this custom, all papers bearing upon the busi- 
ness methods of Mr. E. G. Lewis were forwarded to St. Louis to be placed at 
the disposition of the United States attorney, at whose instance the indictment 
was returned in this case. I have no doubt that Col. Dyer, the United States 
attorney, will permit your representatives to have access to all these papers 
and to make copies if they are needed, so far as may be done without interfering 
with the criminal prosecution. 

"As Mr. Lewis has very bitterly assailed the character, motives, and intelli- 
gence of the inspectors who have made the investigation, it is suggested that 
an investigation on independent lines, as far as possible, will be more satisfac- 
tory to this office, and I have to ask that the statements of the inspectors shall 
not be used in your investigation unless your representatives shall be satisfied 
that they are founded upon facts." 

Under date of April 23, 1906, the postmaster wrote me the following letter: 

" I am in receipt of your letter of the 19th instant, quoting largely from my 
letter to you of the 11th instant, informing me of an intended hearing in the 
matter of the Lewis Publishing Co. on the 27th instant at Washington, and 
requesting me to present the evidence I have, or copies thereof, before that date. 

" In reply I beg leave to state that your request will be complied with so far 
as it is practicable to do so. 

" Before narrating all the facts, however, permit me to express my regret 
that you have not seen fit to comply with my request of the 11th instant for 
the papers submitted by Mr. Lewis challenging the correctness of the position 
taken by this office relative to the legitimacy of the subscription lists to these 
publications. 

" Had these papers been brought to my attention, I could submit a more 
intelligent and a briefer report ; without them it becomes necessary for me to 
take up a multitude of facts and circumstances and to repeat facts already 
stated, many of which could doubtless be eliminated were I not blinded as to 
what particular issues Mr. Lewis has raised in his appeal. 

" The ramifications are so great, and the evidence so intricate and necessary 
of explanation in many particulars, and the time is so short, that I do not 
hesitate to say that I fear that if this is to be the extent to which the Govern- 
ment is to be heard in this appeal, its interests will be inadequately repre- 
sented; especially will this be true if Mr. Lewis is there in person with his 
profuse and specious explanations and representations, with nobody (acquainted 
with the facts) there to combat him. 

" Entering, therefore, upon a recital of the facts, I will state that in the 
spring of 1905 an investigation by inspectors was made of the Lewis Publishing 
Co. and the People's United States Bank, both conducted by E. G. Lewis. 
From information since obtained I learn that during the month of May, 1905, 
as a result of these investigations, revocation of second-class privileges granted 
the Woman's Magazine and the Woman's Farm Journal (published by E. G. 
Lewis) was recommended, and that at the same time a fraud order was recom- 
mended against the People's United States Bank, E. G. Lewis, its president, 
and its other officers. In June, 1905, a hearing was granted Mr. Lewis at 
Washington by the Assistant Attorney General for the Post Office Department 
on the recommendation of a fraud order against the bank. On the same day 
a hearing was granted him by your office on the question of the revocation of 
his second-class privileges. Subsequently the Assistant Attorney General rec- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 79 

ommended to the Postmaster General that a fraud order be issued. On July 6 
the Postmaster General, upon this recommendation, issued the said fraud order 
against Lewis and his bank, which fraud order is still standing. This bank 
fraud was promoted and made possible by use of the editorial columns of the 
Woman's Magazine and Woman's Farm Journal. 

"On December 1 following Lewis was indicted for devising a scheme to 
defraud in connection with the promotion of his bank, and also for conspiracy 
with other officers of the Lewis Publishing Co. to defraud the United States of 
large amounts of revenue resulting from mailing copies of his publications at 
the pound rate in excess of the number he was legally entitled, to mail. These 
criminal cases are still pending and will be brought to trial within a month or 
two. No action, so far as this office is advised, has been taken by you in con- 
nection with the recommendation and hearing on the matter of revoking Lewis's 
second-class privileges. 

" Since the fraud order was made effective Lewis has vilified and maligned 
every officer in any way connected with the issuance of the fraud order against 
him, from the head of the department down, including the judge of the United 
States court, and has placed all of tbem in the category of thieves, conspirators, 
dishonest officials, dupes, or incompetents. In letters signed by Lewis and in 
articles published regularly in his publications since the fraud order was made 
effective, all of which are teeming with anarchistic statements and charges of offi- 
cial corruption, your name alone as an official has received favorable comment. 
The effect of this on thousands of his credulous readers is appalling, as is evi- 
denced by the fact that not only I, as postmaster, but other officials of the 
department here in St. Louis, have received many letters of vituperative con- 
demnation for the course we have pursued in our efforts to protect the revenues 
of the Government. 

"About September 1 last information reached me that Mr. Lewis was sys- 
tematically mailing his publications to ' actual subscribers ' in distinguishing 
wrappers. My employees were instructed to make a proper separation and 
notation of the September mailings of the Woman's Farm Journal and the 
September mailings of the October issue of the Woman's Magazine. These tests 
confirmed the information received as to the distinguishing wrappers. Begin- 
ning with the date of October 5, 1905, the mailings of the Woman's Farm 
Journal were again weighed and tested with the same confirmatory results. 
On October 13, 54 clerks from this office were detailed by me to visit the Lewis 
Publishing Co.'s plant, and call for and count their subscription lists. This was 
done in conjunction with the inspectors who were working on the case. All 
of the card records bearing names of subscribers were called for from Mr. 
Lewis, and when the count was completed the number of actual current sub- 
scribers to the Woman's Farm Journal was found to be 141,328 and to the 
Woman's Magazine, 539,901. 

" In the meantime the matter had been presented to the United States attor- 
ney for this district, who advised the holding of all of the illegitimate mailings 
of the October Woman's Farm Journal as evidence in the criminal case to be 
instituted by him. 

'• Attempts to test the Ojctober mailings of the November issue of the Woman's 
Magazine by distinguishing wrappers were thwarted by Lewis's action in 
changing the system of wrapping after our count of his subscription lists and 
after his learning that the distinguishing system of wrappers had been discov- 
ered by us, but a test made from names selected systematically from his mail- 
ings of this issue of the Woman's Magazine showed the percentage of illegiti- 
mate mailings to be practically the same as was found by the distinguishing 
system of wrappers used the month previous. Since that time both publica- 
tions have been mailed without system as to distinguishing wrappers and with 
every apparent effort on Mr. Lewis's part to prevent the department, if possible, 
from gathering further facts as to the exact number of his illegitimate mailings. 

" We have continued since that date testing his mailings by inquiries through 
postmasters as to addresses shown on his publications, with the result that not 
to exceed 55 per cent of those mailed by Lewis as legitimate subscribers (not 
marked samples) are legitimate subscribers to the Woman's Magazine and not 
to exceed 56 per cent are legitimate subscribers to the Woman's Farm Journal. 
These are general averages arrived at from the full five months' tests since the 
count. 

" From the tests made and evidence in our possession it is shown that prior 
to the date of our count Lewis was padding his mailing lists by the use of 
names purchased for sample-copy purposes and not by the use of expired sub- 



80 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

scriptions. After the count Lewis resorted largely to the use, for padding pur- 
poses, of his expired subscription lists, covering a period ranging from one month 
to three years, of a number about equal to his actual list, as shown by his sub- 
scription-card records, not abandoning entirely the use of purchased sample- 
copy names. His attempt to legalize expired subscriptions was made in face of 
standing notices carried in both of his publications reading as follows: 

"'Discontinuances: Subscribers wishing the Woman's Magazine stopped at 
the expiration of their subscriptions need not notify us to that effect. We con- 
sider it their wish to have it discontinued if they do not renew promptly when 
notilied that the time paid for has expired. * * * 

" ' If you find this paragraph marked it means that your time is out and that 
we will stop sending the magazine if not renewed within 30 days. We do not 
want to lose you, so please renew at once. * * * 

" ' We discontinue sending papers when time paid for expires unless renewed 
within 30 days.' 

•'Lewis's alleged 'citizens' committee,' in charge of Mr. L. B. Tebbetts (a 
director in one of Mr. Lewis's enterprises — the University Heights Realty Co.), 
lays claim to the legitimacy of expired subscriptions under the amendment to 
section 436, postal laws, promulgated December 16, 1905, by your office; with 
this exception their count and the count made by this office are practically alike. 

"As bearing on the question of the number of legitimate subscribers to the 
Woman's Magazine, Lewis made affidavit in this office on October 12, 1905, that 
he had over S00,000 ' paid-in-advance subscribers.' On March 22, 1905, some six 
months previous, when asked by the inspectors, he states in writing that he 
has in cash-paid-in-advance subscribers to the Woman's Magazine over one and 
one-quarter million, and to the Woman's Farm Journal over half a million. In 
addition to this, his September mailings of the October issue of the Woman's 
Magazine (made from September 20 to September 30, 1905) before my count 
was made shows that he mailed but 651,155 copies of the Woman's Magazine 
as regular subscribers and 464,055 as samples, and that on October 20, just 
after the count, he mailed of the November issue of the Woman's Magazine as 
regular subscribers 1,553,425 copies and 96,310 as sample copies, an alleged 
increase of 903,270 regular subscribers in one month and an alleged decrease 
of 377,745 sample copies in one month. In face of these indisputable facts I 
can not understand why any of his statements or explanations are accepted as 
truthful, or why he should be given the sufferance of second-class privileges 
another day. 

" Returning to the number granted Mr. Lewis by this office as legitimate sub- 
scribers, it should be stated that under what appears to be the proper construc- 
tion of the postal laws and the recent amendment of your office a large propor- 
tion of this number are not legitimate subscribers according to this ru5£ng. 
Mr. Lowenstein (who, with Mr. Walter B. Stevens, had charge of the count of 
Lewis's subscriptions made by the alleged 'citizens' committee') admitted to 
us that of the subscriptions counted the class containing the largest number of 
subscribers was the ' 5-cent clubs ' ; the next largest, ' single subscriptions ' ; 
and the next largest, ' 6-cent clubs ' or ' renewals.' From this it will be seen 
that by the reduction made by Lewis from the already nominal subscription 
price, these subscriptions are illegitimate. Further, as stated in my letter of 
the 11th instant, this number is unquestionably made up to a considerable ex- 
tent of subscriptions obtained in contravention of the different rulings of your 
office. In one instance practically 1,000 subscriptions were sent in by a dealer 
in 'face and tooth powder' for advertising purposes; the rate of subscription 
paid was 5 cents per annum. Another case is where over 600 subscriptions 
were obtained since January 1, 1906, by so-called 'clubbing arrangements with 
another newspaper,' by which the Woman's Magazine is practically being sent 
gratis as a premium, the nominal rate of 5 cents per annum being charged. 
The entire list of these names and addresses is now in the hands of the prose- 
cuting officers. Another illustrative case is where a medicine company in a 
southern city advertised to send 'free' the Woman's Magazine for one year for 
two cartons (or outside wrappers) taken from 50-cent bottles of medicinal 
preparations. Upon investigation it developed that in return for advertising 
in the Woman's Magazine Lewis supplied tbis company with 400 yearly sub- 
scriptions to the Woman's Magazine free, the list of names being supplied by 
the drug company. 

" In addition to this some 200,000 names, taken from the sample lists, have 
been added by Lewis to his legitimate subscription lists of persons who have 
never sought and paid for the publication. This has been done under the pre- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 81 

tense that their subscription was paid out of a ' special fund ' donated by 
Lewis's friends, the names to be selected by Lewis ; but even under this arrange- 
ment it is in evidence that the addressees did not receive the publications con- 
tinuously or in consecutive months; in other words, the lists under this ar- 
rangement were changed monthly. These facts are all supported by evidence 
now in the hands of the prosecuting officer of the Government. 

" On the facts above outlined and on other facts, all of which can be cor- 
roborated by evidence now in the hands of the prosecuting officer of the Govern- 
ment, my action was based in demanding of Mr. Lewis additional postage on 
his publications and my recommending to the department the revocation of his 
second-class privileges on both publications, which recommendation I now desire 
to decidedly renew. 

"As a result of the second presentation of the Lewis case to the grand jury 
this week, and the continuous need of this evidence by the United States attor- 
ney and the inspectors in the preparation and conduct of the criminal case 
against Lewis, and because the prosecuting officers have expressed the inad- 
visability of forwarding the evidence or copies thereof at this time, and object 
to it, I regret to state that I find it impracticable to comply with your request 
to transmit the documentary evidence in this case. 

" In conclusion permit me to state that I have not acted in the premises named 
without full realization of my responsibilities, and am not insensible to the 
criticism and abuse which on the part of Lewis and his friends has followed 
such action and which will continue so to do. As postmaster, however, I found 
it my duty to so act in order that the revenues of the Government already 
subjected to frauds perpetrated to the extent of some $75,000 to $100,000 in the 
past two years might not be further defrauded to the extent of about $8,000 
per month, and it is my intention to continue the performance of this duty 
faithfully and fearlessly. In doing so it is my earnest hope that the officers 
at the head of the bureau having jurisdiction over these abuses, and having 
the power to stop them, will give me the loyal and effective support that is 
due a postmaster under such circumstances. 

" I desire to again express it as my conviction that not only should the addi- 
tional postage collected from Mr. Lewis be retained by the Government, but 
that the second-class privilege granted the Woman's Magazine and the Woman's 
Farm Journal should be immediately revoked, because of the unquestionable 
illegitimacy of his subscription lists, and his gross abuse of second-class privi- 
leges in the use of these publications primarily for advertising purposes." 

Certain portions of this letter of the postmaster indicated so unmistakably 
an attitude of insubordination on his part that, manifestly, they could not be 
permitted to pass unnoticed. On April 27, 1906, therefore, I sent him the 
following reply : 

" Your letter of April 23, a copy of which was also sent to the Postmaster 
General, is received. 

" This is not a reply to such parts of your letter as are responsive to my letter 
of the 19th instant, calling for information. There are certain portions of 
your letter, however, not concerned with the merits of the matter to which it 
relates, which, by reason of their unusual character, require special notice at 
this time. 

" You should understand that the second-class mailing privilege of any 
publication depends upon the facts pertaining to that publication as mailable 
matter, and the circumstance, if true, that a publisher has ' vilified and ma- 
ligned every officer in any way connected with the issuance of the fraud order 
against him, from the head of the department down, including the judge of 
the United States court, and has placed all of them in the category of thieves, 
conspirators, dishonest officials, dupes, or incompetents,' or the circumstance 
that the statements made by him are anarchistic, or that any one official has 
not been the object of his displeasure, are matters wholly disconnected from 
his right to the second-class mailing privilege, and are matters which you 
should not permit to enter into the consideration which you as an official are 
required to give the case. If the publisher has libeled you or any other official, 
there is a remedy at law. 

" It is especially important that an official charged with administering the 
postal laws and regulations uniformly should, in the discharge of his functions, 
be entirely unbiased by such circumstances as those upon which you dwell in 
your letter. Particularly should you endeavor to eliminate from your investi- 
gation and report upon the physical facts involved in the inquiry the supposed 
effect, however appalling in your judgment, of these statements upon the 

86534°— 11 6 



82 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

readers of the publication. Neither should you take into consideration as an 
official the letters of vituperative condemnation which you say you have re- 
ceived. While your protestation that you intend to continue to perform your 
duty faithfully and fearlessly is commendable, and you will have the support 
of this bureau whenever your action is just, lawful, and reasonable, you should 
not, by reason of the criticism and abuse to which you say you have been 
subjected, put yourself in the frame of mind of one suffering from delusions 
of persecution, nor should you permit the irritation, which as an individual 
you may naturally feel on that account, to drive you to imperil the success of 
administration by overzealous or hysterical measures. 

" It is my duty to inform you that the cases of the publications mentioned in 
your letter are now with this bureau. They involve two questions: First, 
whether the excess mailings alleged by you are, as a matter of fact, excess 
under the usual rules applicable to all publications; second, the right of the 
publications, as such, to the second-class mailing privilege. 

" The facts with respect to the fraud order against the People's United States 
Bank and the indictment of Mr. E. G. Lewis in connection with the promotion 
of that bank and for conspiracy to defraud the postal revenues, recited at length 
in your letter, are matters of which this bureau has already official cognizance 
and which, in the request for information concerning your ruling as to excess 
copies, you were not called upon to recount at length. Neither is it your duty 
to pass judgment upon the extent to which the Government is to be heard in 
the appeal from your ruling, nor upon the question whether its interests will 
be adequately represented. Equally superfluous is your statement that ' no 
action, so far as this office is advised, has been taken by you in connection with 
the recommendation and hearing on the matter of revoking Lewis's second- 
class privileges.' Whether action has been taken by me or not is something 
which I may be assumed to know, and your statement to that effect in an answer 
to a letter calling upon you for information can be accounted for only upon the 
view that you assume to sit in judgment upon the actions of this bureau and to 
express contempt for them. You must know that conduct of this character will 
not be tolerated, and that a repetition of it will involve consequences more 
serious than the rebuke and reprimand which is now administered to you. 
This reprimand applies equally to other statements in your letter, among them 
the expression of your surprise that any of Mr. Lewis's statements or explana- 
tions are accepted as truthful, or that he should be given the sufferance of 
second-class privileges another day. The law has not delegated to you the 
power or authority to pass upon the second-class privilege of any publication, 
nor, so long as you remain a subordinate officer of this department, are you at 
liberty to review, or express your disapproval of, the decisions of your superiors. 

"It is unnecessary for the present purpose to refer to further evidence in 
your letter of the attitude of insubordination in which you place yourself. 

" It is hoped and expected that hereafter in the management of that part of 
the public business committed to your care you will confine yourself to the duties 
which you are called upon to perform, and in doing so will display sanity, 
moderation, and dignity." 

It is proper to state in this connection that on the occasion of the postmaster's 
call upon me on April 30, 1906, he assured me that there was not the slightest 
ill feeling on his part and that in none of the expressions in his letter was 
there any disrespect intended. 

It seemed quite clear to me from the foregoing letters that I was not to be 
allowed to freely have in my possession for review the evidence alleged to be in 
the hands of the postmaster and the inspectors. Following your verbal instruc- 
tions I then proceeded according to my own methods and practices. 

In response to the telegraphic request of the publisher, the hearing was 
delayed until April 30, 1906. The matter was of such magnitude that the hear- 
ing occupied two days — April 30 and May 1. A copy of the report of the hear- 
ing has already been submitted to you. I hand you herewith another copy, 
marked " Exhibit A." It is important that this report be reviewed at this stage. 

In this connection I desire to call attention to the fact that these publica- 
tions had previously been considered as to their rights to second-class entry. 

The hearing, which was held June 17, 1905, grew out of the following copy of 
a telegram furnished this office: 

" St. Louis, May SI, 1905. 
" Secretary of State Swanger here to-day. Greatly exercised over Lewis 
matter. He has been criticized for failure to act. and recently ordered Lewis 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 83 

to restore the $400,000 withdrawn from bank, to cancel forged proxies, to 
account for all subscriptions received, to Make good all material representa- 
tions, and to select representative body of directors, subject to approval secre- 
tary of state. Should money not be returned to-day Swanger may take charge 
of bank. At secretary's request I have asked postmaster to withhold delivery 
of citation until 4 o'clock this afternoon sharp, purpose of facilitating collec- 
tion of shortage. Situation quite acute and account of its importance and 
because Woman's Magazine now receiving second-class privileges, largely by 
sufferance of department, is and has been the vehicle of promotion of bank 
and for Lewis schemes. I suggest concerted action part of assistant attorney 
and third assistant on reports of 16th instant. Please take up with proper 
officers. 

" Fulton, Inspector in Charge" 

Under date of July 8, 1905, I furnished you a memorandum of my views on 
the subject, of which the following is the closing paragraph: 

" In closing I deem it proper to call attention to the seriousness of the func- 
tion performed by the Third Assistant Postmaster General, acting on behalf of 
the Postmaster General, in relation to these questions of classification. Since 
it is utterly impracticable for the Postmaster General to sit in judgment on 
each case as it arises, the decision of the Third Assistant Postmaster General 
must be final in most cases. Such decisions affect one of the most extensive 
industries in the country and should be sound in morals as well as in law. 
Otherwise they may bring destruction to legitimate business enterprises and 
discredit upon the postal service. It is therefore important that the Third 
Assistant Postmaster General should reach a judgment only after careful con- 
sideration of the evidence w T hich experience has shown to be relevant and mate- 
rial. Especially should he do so without haste or bias and uninfluenced by any 
preconceived notion." 

To that you responded as follows, under date of July 12, 1905: 

" Please have investigation made along the usual lines pursued by your 
bureau to determine whether the Woman's Magazine and the Woman's Farm 
Journal are entitled to transmission at second-class rates. It is desired that 
you will have this investigation completed as promptly as may be consistent 
with your general practice and will bring the results to my attention. 

" Until such investigation shall have been completed it does not appear 
necessary to give the postmaster at St. Louis the instruction which you suggest 
in memorandum of the 8th instant, as continuance of the present practice will 
accomplish the same result." 

The following correspondence is now particularly relevant. Under date of 
July 19, 1905, you wrote Messrs. J. H. Bromwell and Lucius Weinschenk, 
counsel for the Sawyer Publishing Co. et al. (publishers of several of the mail- 
order type of publications), as follows: 

" Careful consideration has been given to the proposition in your letter of 
June 29, addressed to the Third Assistant Postmaster General, in relation to 
the pending injunction proceedings brought in the supreme court of the District 
of Columbia by The Sawyer Publishing Co., a corporation ; William H. Gannett, 
publisher, a corporation ; The George W. Willis Publishing Co., and Lane's 
List (Inc.), a corporation, against the Postmaster General. 

" You are informed that the department is unable to enter into any under- 
standing or agreement with respect to the disposition of the pending cases 
which involves, or is conditional upon, any promise on its part whatsoever. If 
the publishers concerned desire of their own motion to dismiss the suits now 
pending against the Postmaster General, no objection will be interposed. 

"As a part of the general policy and practice of the department and quite 
independent of the dismissal of the suits, it is and has been the intention of the 
department to conduct an inquiry as to the present right of each of these pub- 
lications now enjoying the second-class privilege under these injunctions, apart 
from the inquiries and hearings instituted prior to the injunction proceedings. 
Before conducting these inquiries (in which, of course, fhere will be a statutory 
hearing in respect of each publication) the department will endeavor to for- 
mulate and publish in general terms such explanations of the construction 
placed upon the terms 'designed primarily for advertising purposes, or for free 
circulation, or for circulation at nominal rates' and 'legitimate list of sub- 
scribers ' as the nature of the subject will permit. But it must be distinctly 
understood that the department will decide each case upon its merits as devel- 
oped by the facts in evidence. 



84 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

" So far as may be consistent with this duty of determining the issues of fact 
in each case rules will be framed which may be serviceable as guides to pub- 
lishers, and there is no objection to allowing a reasonable time before the 
rigid enforcement of such rules will be insisted upon. You suggest that 
January 1, 1906, would be a proper date, and in view of the circumstances the 
suggestion is considered a reasonable one. 

"From the foregoing it is not to be understood that the department will 
fail to act before January 1 upon any specially flagrant case of an abuse of the 
second-class privilege where the interests of the Government require prompt 
action. This, however, is not intended to imply that any one of the publica- 
tions involved in the injunction proceedings is regarded as specially flagrant, 
but merely that the department reserves entire liberty of action as to such 
cases." 

The foregoing letter was prepared in this office upon my under standing of 
your intentions, made known to me in your memorandum of July 12, 1905, and 
in interviews which I had with you. Your signing the letter conveyed to me 
what appeared to be your complete concurrence in the policy it announced, 
and which had theretofore and has since prevailed in the work of the Third 
Assistant Postmaster General, namely, that of dealing with publications in 
classes under uniform rules applicable to all alike and published in advance to 
give notice to publishers of the purpose and effect thereof. The Woman's Maga- 
zine and the Woman's Farm Journal have never been regarded as positive 
abuses and certainly not " specially flagrant " ones. The publications them- 
selves are of a better grade than the ordinary mail-order publication, and all 
the tests of circulation which have been made place them on that score also 
above the average. Others who may have so regarded them are simply defi- 
cient in not having a survey of the whole field. 

No rule changing practice which has been made since the reform began but 
has been published and notice given as to when it would take effect, time being 
allowed publishers to make changes in their business to conform to the require- 
ments. One reason for that is that the department itself is not clean handed. 
The practices which it is correcting are riot new, and it is not administering a 
new law. Publishers, therefore, are not to blame for not knowing that any 
practice common among them is wrong, and they are fairly entitled to have 
advance notice of what the department may now disapprove but which, be- 
cause of long-seeming acquiescence, it did not formerly appear to disapprove. 
That consideration and spirit was the basis of the Bromwell-Weinschenk letter. 

Under date of July 21, 1905, I sent you the following memorandum in response 
to yours of July 12. This indicates what my understanding was, and you have 
not at any time advised me that I was in error. 

" In pursuance of the direction in your memorandum of July 12 to have 
investigation of the foregoing cases made along the usual lines pursued by this 
bureau, I have assigned them to be investigated in connection with the other 
mail-order publications covered by your letter of July 19 to Messrs. Bromwell 
and Weinschenk, which outlines the policy of dealing with the class to which 
they belong. In the meanwhile the present status is, as you direct, left un- 
changed and no instructions given to the postmaster at St. Louis." 

A mail-order publication as such is not obnoxious to the law; but it has for 
a long time been believed that grave abuses exist in that class. Circular XXV, 
dated December 16, 1905, was designed mainly to reach the abuses in that type 
of publications, but we have no warrant of law for making rules concerning 
subscriptions for one class of publications alone. All must be treated alike. 
Therefore the rules in Circular XXV apply to all publications. That circular 
was the first rule published after the declaration in the Bromwell-Weinschenk 
letter. It was not felt that it would meet every requirement, because we could 
not foresee every situation which would arise in the course of business. We 
must wait and let experience show whether additional rules were required. If 
so, they should be formulated and published, giving notice, as before, when they 
would take effect. As stated in my report to you, the point had not been reached 
where it was deemed wise to publish any more rules affecting circulation in 
addition to those in Circular XXV. While some of those rules seem to be simple 
on their face, they create a revolution in the publishing business. Account had 
to be taken of this circumstance. It would not do to keep the whole publishing 
industry in a turmoil and wondering what would happen next. It is easy 
to create a panic in this regard. One other reason why we could scarcely 
formulate and publish additional rules was that Circular XXV had itself been 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 85 

suspended in two important particulars, and it would seem to be out of reason 
to consider new rules wueu those already published were not being enforced. 

It was never contemplated that we would he called upon to determine whether 
or not there had been excess mailings at the pound rate on the mere questions 
of volume of expired subscriptions and the time carried. That is the real 
question in these cases, and the department has never before been in such a 
situation. 

Had these cases arisen and been conducted under the practices of the bureau 
of the Third Assistant Postmaster General, no question as to excess mailings 
would have been raised. The broader question of the right of the publications 
to second-class entry at all would have been the issue, and in that case the rule 
stated in Circular XXV as to expired subscriptions would have applied. This 
certainly is made clear in my letter of March 22, 1906, to the chief post-office 
inspector, which will be found on page 16 of this communication. I quote the 
following therefrom : 

" This rule charging the transient second-class rate upon excess sample copies 
is applied in cases where prima facie such excess mailing is not sufficient of 
itself to indicate that the publication should be excluded from the second-class 
rate by reason of its being 'designed primarily for advertising purposes, or for 
free circulation, or for circulation at nominal rates.' Where the mailing of 
such sample copies is, however, sufficient to justify that inference, the practice 
is not to make any different charge for the excess sample copies, but to deter- 
mine that the publication itself is not entitled to the second-class rates at all, 
and that all copies in consequence must be charged the third-class rate." 

As already stated, the rule charging the transient second-class rate on excess 
copies was never contemplated to apply in such cases as the Woman's Magazine 
and the Woman's Farm Journal. That rule was made for emergency or occa- 
sional cases where publications like the daily newspapers or periodicals of the 
higher class, for instance, the Washington Post or the Munsey Magazine, got out 
extraordinarily large issues — more than twice the number of subscribers. The 
question of second-class rights with this type can not well be raised, because of 
excess mailings of a single issue or a few issues; but it is quite a different mat- 
ter where the practice is frequent or regular, as it is alleged 'to be in the case 
of the Woman's Magazine or the Woman's Farm Journal. 

In the case of newspapers and periodicals of the kind mentioned, these large 
editions are nearly always planned without knowledge of the prohibition of the 
law. and hence some rule to meet such situations is required. The hundred-per- 
cent rule meets the need. It is effective only because publishers are not willing 
to resist it. even though the department might not be able to maintain it under 
court review. If resisted, the department would not undertake to enforce it, 
but would take the alternative of declaring that the publication was not 
entitled to second-class rates at all. On the latter issue there is no doubt of 
our being able to maintain our position under court review. 

The doubt as to our ability to maintain our rule of charging the transient 
second-class rate upon excess copies is due to the provisions of the act of 
March 3, 1SS5 (ch. 342, 1 Supp.. 483; sec. 448, Postal Laws and Regulations). 
To the extent of its operation the rule in question sets the provisions of that 
statute nside, for there in plain terms it is stated that the publisher shall be 
charged only th& pound rate and no limit is fixed. Our limit is fixed by a con- 
struction put upon the prohibitory clause of the act of March 3, 1879 (ch. 180, 
sec. 14, 1 Supp., 246; sec. 428, Postal Laws and Regulations). If a publisher 
should insist upon his right to mail excess copies at the pound rate as provided 
in the act of March 3, 1885. we would not try to enforce the rule; we would 
then revert to our right to rule the publication out of the second class altogether. 

The foregoing general policy is what I sought to make clear to Assistant At- 
torney General Goodwin in a letter to him dated April 4, 1906, explaining the 
methods of dealing with this problem. The last paragraph of that letter is as 
follows : 

"Often a publication or its circulation is found to be in conflict with the law 
or regulations in but a few particulars which, taken alone, are insufficient to 
establish that its primary design is contrary to the statute. Where the circum- 
stances warrant such action the publisher is, as a matter of regular practice, 
given an opportunity to correct irregularities." 

Had the postmaster reported, as provided in paragraph 6, section 456, Postal 
Laws and Regulations, that the publisher was mailing sample copies in excess 
of 100 per cent of his subscription list, or more copies than he was entitled to 



86 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

mail at the pound rate under the ruling in Circular XXV, or had the postmaster 
reported that he was holding excess copies, our action, if the case were being 
handled in the bureau of the Third Assistant Postmaster General, would have 
been to require the publisher, if he disputed the postmaster, to establish the 
legitimacy of his list of subscribers and the extent thereof, in order that we 
might determine whether he was mailing excess copies; or, if the circumstances 
warranted, he would have been given notice to show cause why the publication 
should not be excluded from the second class altogether. Failing to prove his 
right to mail at the pound rate the number presented, we would require him to 
pay the transient rate on the excess, or, on his refusing to do that and standing 
upon his right to the pound rate, as provided in the act of March 3, 1885, we 
should then proceed in an orderly way to take up and determine the right of the 
publication to second-class rates at all. A question of an excess mailing or some 
similar question with reference to any publication may recur frequently and be 
decided from time to time as it is raised, before the department deems it proper, 
in the course of uniform administration, to raise and decide the broader question 
of the right of the publication to second-class entry at all. 

This course of procedure was clearly indicated in my letter to the chief post- 
office inspector under date of March 22, 1906. Therein I stated substantially 
that whether or not excess sample copies are, either standing alone or in com- 
bination with other relevant facts, sufficient to indicate that the publication is 
" designed primarily for advertising purposes or for free circulation or for 
circulation at nominal rates," depends upon all the circumstances in the case. 
If a postmaster be in possession of facts sufficient to justify the conclusion that 
copies of one or more issues of a publication offered for mailing at the pound 
rate are in excess of the publisher's privilege at that rate, then it is his duty 
to charge upon such excess the transient second-class rate, assuming, of 
course, that should the publisher dispute the postmaster the question would 
be referred to the department for determination according to the established 
practices. In that letter I also stated : 

" While the postmaster may not deny the second-class mailing privilege 
to a publication except upon a determination to that effect by the depart- 
ment after a hearing, it is his duty, assuming the right to that privilege, 
to charge the lawful rate upon every copy passing through his hands. There- 
fore, if the postmaster has before him facts which, in his judgment, justify 
his determining these copies to be subject to the transient second-class rate, 
he should notify the publisher of that fact and demand that such rate be paid 
before transmission." 

All of the foregoing is stated merely to show the uniform practice in this 
office in dealing with the business of classifying and charging postage on 
second-class mail matter. It is in accord with the spirit of the published 
rulings and the instructions issued from day to day in the conduct of that 
business. Those rulings and that practice were followed in the case of the 
Woman's Magazine and the Woman's Farm Journal in so far as they have 
been dealt with by this bureau. It is important to now state again that these 
cases were not being handled by this bureau prior to your letter of instruc- 
tions of April 14, 1906. All of the papers in the case, whether from the post- 
master, the publisher, or others, as they reached my hand were promptly 
transferred to you, as already shown in this communication, and I asked you 
repeatedly to instruct me if you desired this bureau to deal with the cases. 
You gave no such instructions. My memoranda, quoted herein, show that 
I religiously refrained from any meddling with the case whatever, lest I 
interfere with or thwart the plans or action of some other officer who might 
have been dealing with the case. I was entirely Li the dark as to what was 
being done, save for the correspondence which was coming to me and being 
transferred by me to you. 

I now address myself to answering the specific inquiries in your memorandum 
of February 13, 1907, in the order in which they are made. To make proper 
and complete answers involves more or less a discussion of the whole second- 
class problem. 

You mention and quote Circular III, published in the January, 1905, Postal 
Guide, as the rule which should govern. That is an error. Circular III, except 
in so far as its valid conditions have been transferred and incorporated into 
Circular XXV, is inoperative. Circular XXV was the rule governing this office 
in dealing with the cases. 

I quote the following from your memorandum, beginning on page 3 : 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 87 

"On page 3 of your report it is stated thai the action of the postmaster at 

St. Louis, from which an appeal was taken to you by the Lewis Publishing Co., 
was under authority of the following ruling promulgated by you: 

" ' If sample copies in excess of the number * * * (100 per cent of the 
subscription list) be presented for mailing, they are not entitled to the pound 
rate of postage. They are chargeable with the transient second-class rate of 
1 cent for each 4 ounces or fraction thereof, to be prepaid with stamps affixed, 
on each separately addressed copy or package of unaddressed copies.' 

" Was not that action of the postmaster taken under authority of section 45G 
of the Postal Laws and Regulations of 1902, paragraph 6, as well as under that 
of the ruling just quoted, viz : 

" 'The mailing by a publisher, as sample copies, of a larger number of copies 
than actually subscribed for in order to maintain a given circulation, or the 
continuous mailing of sample copies in excess of 100 per cent of the number 
issued to regular subscribers, or of such copies continuously to the same per- 
sons, will be deemed evidence that the publication is primarily designed for 
advertising or free circulation (see sec. 428), and the sample copies should be 
detained until the facts can be ascertained. The postmaster will promptly 
report the case to the Third Assistant Postmaster General.' 

11 The postmaster also had to bear in mind the fact, as stated in your report, 
on page 21, that ' the publisher's privilege to mail copies at the pound rate 
is held to be limited to those sent to subscribers and those sent as samples.' It 
appears from the tables in your report that from the month of October, 1905, 
to the month of April, 1906, inclusive, there were mailed hundreds of thousands 
of copies of the Woman's Magazine at the pound rate, which were neither sent 
to subscribers nor sent as samples. Was it not the sworn duty of the postmas- 
ter to collect postage on each one of these copies at the rate of 1 cent per copy? 
Was not the postmaster required by law. as well as the regulations, to proceed 
as he did, and had he failed to enforce collection of the postage which he 
actually collected, would he not have been liable upon his bond for the amount 
under section 4051 of the Revised Statutes (sec. 373, Postal Laws and Regula- 
tions, 1902), reading as follows: 

" 'All postages, box rents, and other receipts at post offices shall be accounted 
for as part of the postal revenues; and each postmaster shall be charged with 
and held accountable for any part of the same accruing at his office, which he 
has neglected to collect, the same as if he had collected it' 

" That the department holds postmasters to strict accountability in this con- 
nection is shown by the following note under paragraph 318, page 1036, of the 
Postal Guide for January, 1905 : 

" ' Note. — Postmasters are reminded that under the law (sec. 373, Postal 
Laws and Regulations) they are liable on their official bonds for loss of revenue 
due to faulty administration or neglect.' " 

My answer to the foregoing is that I did not need to know and did not inquire 
under what authority the postmaster acted. That was wholly immaterial to the 
questions given me to decide. Whether the postmaster acted under the pro- 
visions of Circular III, as printed on pages 1040-1041 of the January (1905) 
Postal Guide, or Circular XXV, or section 456 of the Postal Laws and Regula- 
tions, made no difference. He had acted. His authority for the action was not 
a question before me. I was to determine whether he was right or whether he 
was wrong in his conclusions. 

Prior to April 14, 1906, all correspondence received from the postmaster or 
from any other source concerning these cases was transmitted to you promptly 
on receipt and your instructions were asked. You gave none. Because of that 
fact no attempt was made by this bureau to look into the cases in any manner 
whatever or to determine any questions whatever concerning them or to advise 
or instruct the postmaster in any manner whatever except as shown in the 
previous part of this letter. (See pp. 19, 20, 21, 22, 23, and 24.) 

Your letter of April 14, 1906, placed the duty upon me of determining a ques- 
tion of appeal by the publisher from the postmaster's ruling as to mailings of 
excess copies; and the question of the right of the publications to second-class 
entry. On the latter question I have not reported. I have reported only on the 
question of excess mailings. 

Yes, it is the sworn duty of a postmaster to collect the legal rate of postage 
on all mail matter passing through his hands when the legal rate has been de- 
termined; then he is liable on his bond for any amount which he fails to collect, 
the same as if he had collected it. 



88 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



Beginning on page 5 of your memorandum you say : 

" The postmaster reported that of the November, 1905, issue of the Woman's 
Magazine there were mailed, as to subscribers, 486,305 copies in manila wrappers 
and 579,125 in blue wrappers; total, 1,065,430 copies. The postmaster also re- 
ported that but 574,165 copies of that issue were mailed as samples, the grand 
total of copies mailed being 1,639,595. Thus it appears by the postmaster's table 
that there was an alleged increase of 282,668 subscribers for the November issue 
of the magazine over those for the October issue. Even your own table shows 
an alleged increase in copies mailed as to subscribers of 134,554 for November 
over October, 1905, with only 4,905 increase in current subscriptions. Peculiar 
in this connection also is the alleged increase of 332.257 in copies mailed as to 
subscribers in April, 1906, over October, 1905, and a decrease in current sub- 
scriptions of 48,911 for the same period. What explanation is there for this? 

"The tables appearing on pages 4 and 8 of your report are produced below: 

[Page 4.] 
TOTAL MAILINGSr 



Issue. 



Copies. 



Sub- 
scribers. 



Samples. 



Total. 



October, 1905... 
November, 1905 
December, 1905. 
January, 1908. . . 
February, 1906. 

March, 1906 

April, 1906 



852,034 
986,588 
1,127,898 
1,182,854 
1,176,921 
1,138,868 
1,184,291 



603, 181 
531,676 
345,690 
317,818 
312, 439 
360,426 
292,296 



1,455,215 
1,518,264 
1,473,588 
1,500,672 
1,489,360 
1,489,294 
1,476,587 



T Page 8.] 
SUBSCRIPTIONS. 



Date. 


Current. 


Expira- 
tions. 


Total. 


October, 1905 


576,802 
581,707 
603,477 
577, 771 
559,812 
529,717 
527, 891 


198,632 
187,589 
175,494 
196,584 
224, 492 
277,011 
292,747 


775, 434 


November, 1905 


762, 296 


December, 1905 


778,971 


January, 1906 


774,355 


February, 1906 


784,304 


March, 1906 


806,728 


April, 1906 


820,638 







" It will be seen by reference to the second of these tables that the number 
of copies of the publication claimed by the publisher as being sent to those 
whose subscriptions had expired, to wit, 579,000, is within 2,000 of the total 
current subscriptions, as shown on page 8 of your report. 

"From this large mailing of the November issue to persons whose subscrip- 
tions had expired it would appear that, as indicated in your report on page 10, 
the publisher was not, prior to the count of the postmaster and the inspectors, 
carrying on his list from 200,000 to nearly 300,000 names and addresses of such 
expirations in the hope or expectation of securing renewals. Had he been doing 
this prior to that count, it would not have been necessary for him to have sent 
this large number of expirations with the November issue." 

Some of the statements above quoted are misleading. The figures 579,125, 
alleged to represent the number of copies of the November, 1905, issue mailed to 
persons whose subscriptions had expired, are taken from the conjecture of the 
postmaster, based upon his inference from the color of the wrapper. The actual 
count, tabulated in my report, shows that the publisher had for that issue 
576,802 current subscriptions, and in addition thereto 198,632 expired subscrip- 
tions (allowing expirations to be carried six and two-fifths months), making a 
total of 775.434. It should be understood that the two tables which you quote 
from my report have no definite relation to each other in the matter of the deter- 
mination of the question of excess mailings, except as to totals. The first shows 
the total number of copies mailed at the pound rate of the issues indicated, based 
upon the receipts issued by the postmaster, and the second shows the total num- 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 89 

ber of subscriptions which the publisher had for his publication on the dates 
given, including those current and those which had been expired for nol Longer 
than six and two-fifths months. When the actual count shows, as it docs, that 
the number of subscriptions which the publisher had for the particular issues in 
question was more than half of the number of copies mailed of those issues, it is 
of no value to insist, upon the basis of the postmaster's understanding of the 
significance of the wrapper, that the number of subscriptions claimed as expired 
amounted to 579,125. In the face of the actual count of the current and expired 
subscriptions at that time, the conjecture of the postmaster from the color of the 
wrappers ceases to have, if it ever had, any relevancy to the question at issue. 
Otherwise, we are begging the whole question to be decided by assuming that, 
in mailing a total of 1,51S,264, the publisher did not mail as many samples as 
he was lawfully entitled to mail. The calculations of the postmaster, based 
upon blue and inanila wrappers to which you refer, were wholly superficial, 
and grounded upon no real understanding or knowledge of the number of sub- 
scribers actually on the publisher's list. The duty cast upon me by your direc- 
tion was to find the exact mathematical facts with respect to the excess mail- 
ings of this publication. The question was whether or not the total number 
of copies mailed exceeded the total number of copies which the publisher was 
entitled to mail, including his sample copy privilege. There can be no excess 
mailings by a publisher so as to subject him to the transient rate unless the 
total of his mailings of the issue in question exceeds the combined total of 
samples and subscribers, giving him the benefit of one sample for every sub- 
scription. Although there may be some difference of estimate as to the total 
number of subscribers' copies, whether current or credit, if the number finally 
arrived at multiplied by two does not exceed the mailing of the publisher, there 
is no power to declare that his mailing is in excess. Having the right to send 
samples to the amount of 100 per cent of his subscribers, if the total number 
does not exceed twice the number of such subscribers, then there is. in fact,' 
no excess mailing at the pound rate. The facts shown by the count for the 
month ending October 31, 1905, upon which the November mailing must be 
based, are: 

Current subscribers 576. 802 

Expirations 198, 632 

Total subscribers 775, 434 

An equal number of samples 775,434 

Total mailable at the pound rate 1, 550, 868 

In short, the publisher was entitled to mail 1,550.868 copies, but actually 
mailed 1.518,264 copies, which, so far from being an excess over his privilege, 
is 32,604 less than he was clearly entitled to mail. 

The mathematical count of the number of subscribers demanded by this 
investigation was made. When it was done, the conjectures of the postmaster, 
based upon his inferences from the color of the wrappers, ceased to have any 
further value. If it be true that the publisher mailed 579,125 copies of the 
November, 1905, issue in blue wrappers, either he was so mailing a large 
number to persons whose subscriptions had been expired more than six and two- 
fifths months or to persons whose subscriptions were still current, or a large 
number of the copies so mailed were sent to nonsubscribers possibly as samples, 
although not so marked. However that may be, the fact remains that his total 
mailing was considerably less than the number he was enitled to mail, allowing 
one sample copy for each subscriber's copy. 

That not all copies mailed by the publisher in blue wrappers were sent to 
persons whose subscriptions had expired, is evidenced by the Investigations of 
the postmaster himself, for, in a letter dated May 23. 1906, addressed to Mr. 
Fettis, who was chairman of the commission which investigated the Woman's 
Magazine and the Woman's Farm Journal, he said : 

" * * * On your arrival in my office we had an informal discussion at 
which time it appeared that you attached little or no importance to the mailings 
of the magazine in blue wrappers, as you remarked to my secretary, Mr. Mc- 
Burney. 'I do not see why you attach so much importance to blue wrappers 
as it is already conceded by Mr. Lewis that they are expirations and are mailed 
as such.' 

"This much surprised me, as my investigations show that Mr. Lewis has been 
mailing in blue wrappers papers to persons whose subscriptions have expired 



90 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

as far back as two, three, and four years. He is also mailing in blue wrappers 
papers to actual subscribers and to those who have never subscribed, so I 
found by my tests. 

" The significance of the blue wrappers is a most important factor in this 
investigation, particularly as the majority of the papers sent out on expired 
subscriptions (the twelfth issue) are being mailed in manila wrappers as 
current subscriptions, and not in the blue wrappers which should rightly inclose 
them. 

"A test on simply the manila and white wrappers is incomplete. I am 
calling your attention to the above because of my desire to see the investigation 
you are making thorough and complete." 

Furthermore, the postmaster in a letter dated December 19, 1906, transmitted 
to the Third Assistant Postmaster General a statement showing the results of 
tests on the mailings of the Woman's Farm Journal from the October, 1905, 
issue to the November, 1906, issue, and on the Woman's Magazine from the 
December, 1905, issue to the November, 1906, issue, which results are based 
on letters of inquiry sent out by and returned to him up to December 18, 1906. 

From this statement it appears that of the copies tested of various issues of 
The Woman's Farm Journal mailed in blue wrappers a percentage varying 
from 4.4 to 66.7 was sent to persons whose subscriptions had not expired, and 
a percentage varying from 5.7 to 20.9 was sent to nonsubscribers. 

On The Woman's Magazine, for various issues during the period covered by 
the tests, it is shown that of the copies mailed in blue wrappers a percentage 
varying from 9.5 to 28.2 was sent to persons whose subscriptions had not ex- 
pired, and a percentage varying from 8.3 to 25.6 was sent to nonsubscribers. 

That the result of these tests contradicts the publisher's advertised state- 
ment that only expirations are mailed in blue wrappers is of no value whatever 
as against the facts disclosed by the investigation. It only shows that the sup- 
posed evidence of the color of the wrapper is not conclusive as to the termi- 
nation of the addressee's subscription, or even that he is a subscriber at all. 

The question you gave me to decide was whether the publisher mailed excess 
copies, and not whether the regulation of the department requiring the stamp- 
ing of the copies as samples (under the statute it is a privilege, not a require- 
ment) had been complied with. A sample would not cease to be a sample and 
properly accountable as such in determining the total mailing because it was 
not marked, or because it was put up in a blue instead of a manila wrapper. 
It no doubt might fairly be assumed from the publisher's advertisement that 
copies mailed in blue wrappers were sent to those whose subscriptions had ex- 
pired, but such evidence was not conclusive. The postmaster involved himself 
in confusion by assuming out of hand that all copies not marked samples were 
subscribers' copies and that all copies sent in blue wrappers were of necessity 
sent to persons whose subscriptions had expired. He deducted from the total 
only those marked as samples, and assuming all the rest to be subscribers' 
copies divided them into current and expired upon the supposed evidence of the 
color of the wrapper. It was in this way that he reached the result that 
579,125 were expired subscriptions and 486.305 were current subscriptions, in 
ignorance of the fact developed by the actual count that the number of expired 
subscriptions for that issue (estimated on the basis of their being carried 
six and two-fifths months after expiration) was 198,032 which, with the current 
subscriptions for the same issue numbering 576,802, made a total of 775,434 
and justified the publisher in mailing an equal number of sample copies 
(775,434). These combined do not exceed the actual mailings for that issue 
as shown by the records of the post office. The question whether the publisher 
mails copies in excess of the number required for subscribers plus an equal 
number of samples, is altogether a distinct and different question from that 
of whether the copies mailed are stamped " samples " or otherwise identified 
as such. 

That the post-office clerks themselves made mistakes in their record as to 
whether the copies were sent as subscribers' copies or as sample copies, seems 
to be established by Exhibit 47 of the report of the commission which investi- 
gated the Woman's Magazine and the Woman's Farm Journal, which I com- 
mend to you for review. 

Concerning your question as to the increase in the number of copies mailed 
as to subscribers of 134.554 for November over October, 1905, I have to say 
that the explanation will be found in Exhibit 47 of the commission's report, 
above referred to. It amounts to merely the publisher's statement. It may be 
taken for what it is worth. It, however, had no weight in my decision as to 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 91 

whether there was or was not an excess mailing of that issue. The question 
was one of totals, and I found the facts. 

What number of expirations the publisher was carrying prior to the period 
covered by the count which was made by the commission from this bureau was 
not taken into account. I was charged with the duty of finding whether the 
publisher had, from the issue of October. 1905, to and including the issue of 
May. 1906, mailed excess copies at the pound rate. I did not investigate what 
his practices were prior to October, 1905, but found the facts as to the issues in 
question. 

I quote from your memorandum beginning on page 7: 

" The question before you for decision is thus stated in your report : 

"'The question is simply one of fact — did the publisher, under the ruling 
quoted on page 3, mail at the pound rate more copies of either publication than 
he was entitled to mail; and if so, to what extent did he exceed his privilege?' 

" Further you say : 

"'The decision of this question depends entirely upon the number of sub- 
scribers: that is to say, in order to decide as to whether there was or was not 
an excess mailing at the pound rate it is necessary to find whether the persons 
whose names and addresses appear on the publisher's list as subscribers are 
such as a matter of fact, and the whole number of them, the publisher, under 
the ruling, being entitled to mail an equal number of copies at the pound rate 
as samples.' 

" Then it is said that : 

" ' Whether the persons on the list are subscribers can not be decided upon 
the methods of the publishers in securing their subscriptions, but the result 
of the methods may be used in finding whether or not the persons whose names 
and addresses were found on the list were in fact actual subscribers ; that is to 
say, the question of whether or not such persons are in truth subscribers turns 
not upon the matter of how they subscribed or how they were secured but is 
one of fact — did they subscribe?' 

" The statement that • whether the persons on the list are subscribers can not 
be decided upon the methods of the publisher in securing their subscriptions' 
seems to be contradictory to paragraphs (a), (6), (c), (d), (e), (/), (g), (i), 
and 0) of your circular of December 16, 1905." 

The things enumerated in Circular XXV from (a) to (;) are simply indica- 
tions of the ways in which alleged subscriptions are often placed upon the 
books of a publisher. The description of the way in which such alleged sub- 
scriptions are sometimes placed upon the books does not establish any rule of 
law with respect to the testing of the subscriptions. The question remains 
whether the subscription is an actual subscription, and the purpose of the sec- 
tions (a) to 0) was simply to point out certain methods which might be 
employed for the purpose of placing such subscriptions upon the books. They 
are not conclusive as to the facts in establishing whether any such subscription 
is or is not valid. The statement in Circular XXV that they are devices by 
which certain alleged subscriptions are secured is not a declaration that every 
subscription obtained in one of the manners specified must of necessity be a 
false subscription. 

Your error probably arises through a misconception of the rules. So far as 
known this publisher offered no premiums at all to subscribers. It matters 
not how a subscriber was secured if, as a matter of fact, he did subscribe. So 
far as the ruling went in this case, to constitute a person a subscriber he must 
have paid the full subscription price without any rebate whatever. The mis- 
take you appear to be laboring under is due to the failure to discriminate be- 
tween the giving of compensation to agents by way of premium or otherwise 
and a rebate of some kind to the subscriber himself. It is wholly immaterial 
what a publisher does with the money secured from a subscriber. He may have 
paid part or all of it to an agent securing the subscription. As stated in my 
report, the question is one of fact: Did the person subscribe? I ruled out all 
subscriptions secured through clubbing arrangements where it appeared that 
the publication was given to any person as a premium for subscribing to some 
other publication, or for purchasing an article of merchandise, or where there 
was any reduction whatever in the subscription price to the subscriber. Whether 
it was with or without the knowledge of the publisher was wholly immaterial, 
and I so stated. 

With a view to making the explanation complete, I beg to say that the seem- 
ing conflict with paragraph (/) of the circular of December 16, 1905, applies in 
only two cases, so far as was ascertained. One was the case of Conkey's Home 



92 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

Journal, formerly published in Chicago. There was in that case, however, no 
conflict with paragraph (/), because at the time that Conkey's Home Journal 
was merged with the Woman's Magazine it was not a defunct publication, but 
a going publication ; and the merging of publications, one with another, is con- 
stantly going on in the publishing business and is a perfectly legal proceeding. 
The second was the case of the New Empire, formerly published at Kansas 
City, Mo., and purchased by the Lewis Publishing Co. At the time of the pur- 
chase it was a going enterprise and was not defunct, as it must have been to 
fall within the prohibition of paragraph (/). We have only the publisher's 
statement in this latter case, however, as nothing was found in the records. 
The sending of copies- of the Woman's Magazine in fulfillment of subscriptions 
to these publications has been long since discontinued, according to the pub- 
lisher, the subscriptions having either expired or become renewed to the 
Woman's Magazine. 

I quote the following from page 8 of your memorandum : 

" On pages 5 and 6 of your report you say : 

" ' Consideration must be given to the circumstance that this publication is 
sold at a very low rate, and naturally the publisher could not afford a too ex- 
pensive system in the securing, classifying, handling, and accounting methods. 
The publisher stated at the hearing before this office substantially that he had 
sought to observe every known rule and limitation of the Post Office Department 
in the conduct of his business, and if it were found that any practice or method 
of his was in conflict with the rules he would immediately amend the same, for 
he stood ready to meet all requirements as soon as he could find out what those 
requirements were.' 

" It has been claimed by the Lewis Publishing Co. that it conducts the most 
profitable publishing business in the world. Accepting this claim as true, why 
should the company be excused for failing to install and keep an adequate and 
accurate system of records and accounts, from which the true condition of its 
business could be ascertained and its methods and practices in respect of its 
second-class mailing privilege shown to be in conformity with law and postal 
regulations? 

" If it be true that the subscription price is so low that the publisher can not 
afford to keep accurate accounts so that his minutes will bear an investigation, 
then it would seem that the subscription price must be merely nominal and that 
that ought not to excuse him from keeping such accounts." 

This argument would seem to be that because the business is profitable as a 
whole the publisher can not be excused from maintaining a system of account- 
ing for subscriptions which would eat up all of the revenue from subscriptions. 
This is simply reasoning in a circle, for if the publisher of a low-priced paper 
is compelled to maintain a system of accounting for each subscription incom- 
mensurate with the revenue derived from that subscription there would no 
longer be the profit which is taken as the basis of this argument. This propo- 
sition is clear : No publisher can in any case be required to maintain for his 
publication a business system more expensive that the business will justify. 
If, by a system no more expensive than the business will justify, he is able to 
maintain a profit, the existence of that profit can not be made the ground for 
requiring a system which would destroy the profit. 

It has never been held that a publisher's methods of keeping his accounts or 
records are subject to regulation or supervision. There is nothing in the law 
or regulations which requires a publisher to keep any record at all of the persons 
he claims as subscribers. If the department raises the question of whether the 
list of subscribers is legitimate, as required by law, it is up to the publisher to 
prove its legitimacy. If his records be insufficient to establish that or any 
other essential fact upon which second-class entry depends, he suffers accord- 
ingly, since he may be deprived on that account of second-class rates upon the 
ground that he can not establish that his publication meets the requirements of 
the law. The burden of proof is upon him. In this connection section 1593, 
Postal Laws and Regulations, applies: 

" Any person who shall submit or cause to be submitted to any postmaster or 
to the Post Office Department or any officer of the postal service any false evi- 
dence relative to the character of any publication for the purpose of securing the 
admission thereof at the second-class rate for transportation in the mails shall 
be deemed guilty of a misdemeanor, and for every such offense, upon conviction 
thereof, shall be punished by a fine of not less than $100 or more than $500." 

This order of procedure was reversed in these cases, since the department 
undertook to show that the publisher was not entitled to mail at the pound 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 93 

rate the number of copies which he did mail. It was not left to him to show 
that he was entitled to mail that number of copies. 

As indicating the method of procedure heretofore employed in such cases, the 
following: is illustrative: The postmaster at St. Louis has just reported that the 
Journal of Agriculture, published by the Lewis Publishing Co., has mailed an 
excess number of sample copies with the mailing of January 23, last. The 
following letter was sour him February 20: 

" In further reply to your communication of the 13th instant, you are in- 
formed that your action in requiring the transient second-class rate of postage 
on an alleged excess number of sample copies of the Journal of Agriculture pre- 
sented for mailing on January 23, is approved unless the publisher is able to 
show that the number of sample copies of the issue in question mailed did not 
as a matter of fact exceed his actual number of subscribers for that issue." 

In this case it will be seen that it is up to the publisher to prove his rights. 
We do not go in and concern ourselves with his business methods, or the suffi- 
ciency or insufficiency of his records. We reserve the right, however, to pass 
on the sufficiency of his proof when presented. 

The following is quoted from your memorandum, beginning on page 8 : 

" On page 7 of your report you say : 

" ' The report of the commission and the voluminous exhibits accompanying 
it show the exactness and closeness of scrutiny in the work as a whole. The 
result of every test is favorable to the publisher, and where inquiries were 
addressed to the subscribers themselves the replies favored him to an average 
of about 90 per cent or over.' 

" This statement of the percentage of instances in which the claims made by 
the publisher were substantiated is in striking contrast with the report of the 
postmaster at St. Louis, which shows that an average of only 56 per cent of 
persons claimed as subscribers, and in respect of whom inquiries were made of 
postmasters at the post offices of address at the rate of 1,000 a month, were 
actual subscribers. 

" The table on page 4 is supposed to represent the actual mailings of the 
Woman's Magazine for the months stated, consisting of regular subscriptions 
and samples. The table on page 8 is said to represent the copies of the publica- 
tion for those months which the publisher was entitled to mail, as ascertained 
by an actual count of subscribers' orders by the commission, including those ex- 
pired. It appears that at the time this count was made (October, 1905), the 
publisher was not treating subscriptions which had expired more than three 
months previously as legitimate subscriptions ; but conceding that they should 
be so regarded to the extent indicated by your second table, the total number 
of subscriptions to which he was entitled by your count of subscription orders, 
as shown by that table, is much less each month than the number that the pub- 
lisher mailed as regular subscriptions alone, according to your first table; the 
difference ranging from over 76,000 in October. 1905. to over 408,000 in January, 
1906. In April. 1906, the difference was about 363,000. What explanation can 
you give for regarding as actual subscribers persons to whom copies are sent 
so largely in excess of the number found by your commission to be entitled to 
go at the pound rate, even though expired subscriptions be included? The 
excuse offered is : 

" ' The totals ^given in the foregoing table, it will be seen, do not agree with 
the estimates made from the pounds mailed as shown by the receipts issued by 
the postmaster. They are considerably less in each case; but at every mailing 
covered by the investigation the list of current subscriptions fairly allowable 
under the rules, excluding expirations (credits), was more than the number of 
sample copies mailed, with two exceptions — that of the October, 1905, issue and 
that of the May. 1906, issue. The current subscriptions for those issues, ex- 
cluding expirations, were for October, 1905, 576,802, while it appears from the 
estimate made from the postmaster's record of weight that 603.1 si. sample 
copies of that issue were mailed; and for the May, 1906, issue 527.891 current 
subscriptions were found, while the estimate of the mailing of sample copies 
is 547,701. Therefore, except for those issues the question of whether the pub- 
lisher exceeded his privilege to mail copies at the pound rate is easily and 
clearly disposed of. Whether or not there were excess mailings with the issue 
of October, 1905, and May, 1906. turns upon the question of whether the so- 
called expirations are allowable. If allowable, the publisher is more than safely 
within his privilege; indeed, he might have mailed many thousand more.' 

" The reference in the foregoing statement to the month of May, 1906, is evi- 
dently intended for April, 1906, as shown in the two tables. It is said that 



94 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



while for the May, 1906, issue 578,811 current subscriptions were found, the 
extent of the mailing of sample copies as taken from the postmaster's record of 
weight is 547,701. As a matter of fact the table on page 4 shows the number of 
sample copies mailed in the month of April, 1906, as 292,296, instead of 547,701 ; 
the discrepancy being over 255,000. How do you explain this discrepancy? 

" Your statement that the totals of copies actually mailed do not agree with 
the estimates made by you, but that at every mailing covered by the investi- 
gation the list of current subscriptions fairly allowable under the rules, ex- 
cluding expirations (credits), was more than the number of sample copies 
mailed, with but two exceptions, may explain the large mailings as samples, 
but it does not explain or excuse the mailing as subscription copies of copies 
largely in excess of the number which, according to your estimate, the pub- 
lisher was entitled to mail during the months shown in the table. The con- 
tention of the postmaster at St. Louis is not alone that the publisher has mailed 
sample copies, so marked, in excess of the number he was entitled to mail, 
but that he has mailed as going to subscribers, copies of the publication largely 
in excess of the number entitled by law to be so transmitted. The publisher is 
required under the regulations to mark ' Sample copy ' on the exposed face of 
every sample copy, or its wrapper, or on the wrapper of the package which may 
contain a bulk number of such copies. Also under paragraph (6), section 317, 
page 1036, of the Postal Guide for January, 190 t >, the publisher is required to 
'make separate packages (or sacks) of (1) samples, (2) of other copies subject 
to postage at the pound rate, and (3) copies entitled to free county circula- 
tion; and when so presented each kind must be weighed separately, fractions 
being counted full pounds in all cases * * * and so recorded in the receipt 
book.' 

" The publisher offered, and the postmaster accepted, as mailed to actual sub- 
scribers the following number of copies for the months shown below, in excess of 
the number which you report him to have been entitled so to mail, even with the 
inclusion of expired subscriptions: 

COPIES. 



Issue of— 


Mailed. 


Entitled 
to mail. 


Excess. 


October, 1905 


852,034 
986, 588 
1,127,898 
1,182,854 
1,176,921 
1,138,868 
1, 184, 291 


775,434 
762, 296 
778, 971 
774,355 
784,304 
806,728 
820, 638 


76,600 
224, 292 
348, 927 


November, 1905 


December, 1905 


January, 1906 


408, 499 


February, 1906 


392, 617 
332, 140 


March, 1906 1 


April, 1906 


363, 653 






Total 


2, 146, 728 
306, 675 















" Your own estimate shows that the postmaster was under official obligation 
to collect postage on these excessive mailings, approximately in the amounts in 
which he did make collections, beginning with April, 1906. 

" The statement accredited to the publisher that he carried subscriptions on 
his list six months with the expectation of securing renewals, and that the in- 
vestigation disclosed that some of the subscriptions were carried six and two- 
fifths months, and in some cases as long as eight months, due to the methods 
employed, appears absolutely inconsistent with the notices carried in his pub- 
lication at the time of the investigation by the post-office inspectors, and 
quoted below : 

" ' Discontinuances : Subscribers wishing the Woman's Magazine stopped at 
the expiration of their subscription need not notify us to that effect ; we shall 
consider it their wish to have it discontinued if they do not renew promptly 
when notified that the time paid for has expired. 

" ' If you find this paragraph marked, it means that your time is out and that 
we will stop sending the magazine if not renewed within 30 days. We don't 
want to lose you, so please renew at once. If your paper comes in a blue 
wrapper, it is also a notice to you that your subscription has expired.' 

" Beginning with the May, 1906, mailing of the June issue of the Woman's 
Magazine, the 30-day discontinuance rule was dropped and the following notice 
substituted : 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 95 

u * Discontinuances : Subscribers wishing the Woman's Magazine discontinued 
need not notify us to that effect : we shall consider it their wish if they do not 
renew after having been notified that the time paid for has expired. 

" ' If you find this paragraph marked, it means that your advance payment 
is out and that we will stop sending the magazine if not renewed. We don't 
want to lose you. so please renew at once. If your paper comes in a blue 
wrapper, it is also a notice to you that your paid in advance time has expired.' 

" This statement of the publisher is also contradicted by Miss Eleanor Jones, 
who was a forewoman in charge of the addressing department of the Lewis 
Publishing Co. from May, 1002, to August, 1905, and who makes affidavit that 
expired subscriptions were withdrawn from the current files of the Woman's 
Magazine after three months, and were not thereafter used as current sub- 
scriptions or expired subscriptions, and that the publication was not thereafter 
mailed to such former subscribers except as sample copies not to exceed three 
times a year. Her affidavit also states that it was the custom to use blue 
wrappers upon copies sent to those whose subscriptions have expired, as long 
as their names were retained in the files. Miss Jones is of known reliability 
and standing, and her statement in this and other respects bearing on the 
methods employed by the publishing company are supported by those of her 
sister, Miss May Jones, and two other employees of the publisher, whose affi- 
davits were taken. These affidavits are before me. Furthermore, when the 
inspectors and the postmaster made their count on October 13, 1905, they found 
that the card records containing names of persons whose subscriptions had 
expired from three months to three years prior thereto were secured by rubber 
bands which were so rotten that when the bundles were opened the bands fell 
to the floor in pieces, indicating clearly that these records were not being used 
regularly for mailing purposes, as claimed; while the current card files were 
wrapped with fresh rubber bands and indicated continued and regular use. 

" The publisher's statement seems to be disproved by the fact that on October 
20, seven days after the inspector's count, according to the postmaster's figures, 
there were mailed as to regular subscribers 579,125 copies of the November, 
1905. issue, in blue wrappers (indicating that the subscription had expired), 
which was within 2,000 of the number of current subscribers that you credit 
him with having. This in itself would condemn the publisher under the ruling 
quoted on page 10 of your report, for the reason that, according to your figures, 
he mailed with this issue 936,557 copies of the publication as sample copies and 
to persons whose subscriptions had expired, as against a current subscription 
list conceded by you for that month of 581,707 ; an excess of 354,850 copies sent 
' free to the recipients thereof,' over those sent to subscribers and paid for." 

Answering the foregoing I have to say that no explanation as to the percent- 
age of replies favorable to the publisher would answer so well as the records 
themselves. A description of the tests made will be found in the report of the 
commission on the Woman's Magazine, beginning at page 29. and in the report 
on the Woman's Farm Journal, beginning at page 11. The tabulated results 
of the tests will be found in the exhibits referred to in the various descriptions 
thereof. These reports and their accompanying exhibits are submitted here- 
with for your information. 

I did not look into or consider the tests made by the postmaster and do not 
know how he classified them. I was deciding an appeal of the publisher from 
the rulings of the postmaster, and I made my own tests according to regular 
practices. What the postmaster found or reported, or what the publisher or 
any other person said or did, had nothing to do with my decision on the facts. 

Concerning the table on page 4 of my report, I have already stated that it 
was serviceable only as to totals. It is an estimate of the total number of 
copies mailed to subscribers and as samples, based on the receipts of the post- 
master issued to the publisher. The number of copies given as " subscribers' 
copies " and the number of copies given as " samples " have nothing to do with 
the case; but the total mailings, as shown by the table, are of first importance, 
since they must be justified by the number of subscribers found by actual count. 
The table on page 8 shows that the totals of the current and expired subscrip- 
tions were sufficient to justify the total mailings of the issues in question, as 
shown in the table on page 4. The question I decided was one of totals. 

This also answers in part your inquiry as to what explanation can be given 
for regarding as actual subscribers persons to whom copies were sent so largely 
in excess of the number of subscriptions found by the commission. This ques- 
tion is fully answered in Exhibit 47. I do not say that the table on page 4 
represented the facts as to subscribers' copies and sample copies, for the investi- 
gation showed that it did not. 



96 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



My statement, which you quote from my report, was unfortunate in not being 
clear as to exactly what was intended. I should have said that the num- 
ber of current subscriptions for all issues except October, 1905, and May, 1906, 
as found by the commission, was sufficient to account for the number of sample 
copies as estimated from the postmaster's record of weights; and I meant my 
statement to show that the current subscriptions for those two issues were 
not sufficient to carry the number of sample copies mailed according to the 
table on page 4. To have been clear as to my meaning the sentence should have 
read as follows : " Therefore, except for those issues the question of whether the 
publisher exceeded his privilege at the pound rate with respect to his mailings 
of sample copies so marked, as found from the postmaster's records, is easily 
disposed of; but that is not the question. It is one of total mailings." The 
entire statement might have been omitted from my report altogether, because 
it had no value as to the ultimate facts. 

You are not quite right as to the statement referred to as " May " being in- 
tended for " April " in the tables. There was an omission of the figures for 
May, 1906, in the table showing the mailings, an oversight of the typewriter, 
due to the hurry in which the decision was prepared. In order to supply this 
omission and to illustrate clearly what I failed to make you understand in my 
original report ; that is, that the determination of the question of excess mailings 
is dependent solely upon the totals involved, I submit the tables again in com- 
plete form, with the subscription table extended to show the number of copies 
of each issue which the publisher was entitled to mail at the pound rate, allow- 
ing one sample copy for each subscriber's copy. I submit also a table showing 
the number of copies of each issue which the publisher was entitled to mail, 
the estimated number which he did mail, and the difference in his favor. 

Table shotting the number of subscriptions on the dates indicated, and the total 
number of copies mailable at the pound rate, based thereon, for the issues of 
the months folloiting the respective dates. 





Subscriptions. 


Equal 
number 
samples. 


Total 
copies 


Date. 


Current. 


Expira- 
tions. 


Total. 


mailable 

at pound 

rate. 


Oct. 13, 1905 


578, 346 
570, 802 
581,707 
603,477 
577,771 
559, 812 
529,717 
527, 891 


214,483 
198, 632 
187,589 
175,494 
196.584 
224! 492 
277,011 
292, 747 


792,829 
775. 434 
769. 296 
778, 971 
774, 355 
784, 304 
806,728 
820, 638 


792,829 
775, 434 
769, 296 
778, 971 
774, 355 
784,304 
806,728 
820, 638 


1 , 585, 658 


Oct. 31, 1905 


1,550,868 


Nov. 30, 1905 


1,538,592 


Dec. 31, 1905 


1,557,942 


Jan. 3] , 1906 


1,548,710 


Feb. 28, 1906 


1,568,608 


Mar. 31, 1906 


1,613,456 


Apr. 30, 1906 


1,641,276 







Table showing the estimated number of copies mailed at the pound rate of the 
issues indicated, based upon the postmaster's record of iceights. 



Copies. 



Subscribers. Samples 



Total. 



October, 1905... 
November, 1905 
December, 1905. 
January, 1906. . . 
February, 1906. 

March, 1906 

April, 1906 

May, 1906 



852, 034 
986, 588 
1,127,898 
1,182.854 
1,176,921 
1,138,868 
1,184,291 
944,928 



603, 181 
531 , 676 
345.690 
317,818 
312, 439 
360,426 
292, 296 
543,701 



1,455,215 
1,518.264 
1,473.588 
1,500,672 
1,489,360 
1,499,294 
1,476,587 
1,488,629 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



97 



Tabic showing the number of copies the publisher inis entitled to mail of the 
issues indicated, the estimated number which he did mail, and the additional 
number which he might have mailed without exceeding his privilege at the 

pound rate. 





Number of copies. 


Additional 


Issue. 


Entitled to 

mail. 


Actually 
mailed. 


copies 
mailable 


October, 1905 


1,585,658 
1,550,868 
1.538,592 
1,557,942 
1,548,710 
1,568,608 
1,613,456 
1,641,276 


1,455,215 
1,518,264 
1,473,588 
1,500,672 
1,489.360 
1,499,294 
1,476,587 
1,488,629 


130, 443 




32,604 




65,004 




57,270 


February. 1906 


59,350 


March, lQOfi 


69,314 


April. 1906 

May 1 906 ." 


136,869 
152, 647 







I did not mean it to be understood that the totals of copies which the pub- 
lisher was entitled to mail did not agree with the estimates made in the way 
yon have taken it. What I did mean was that the totals found by actual count 
did not agree with the estimates of mailings so far as subscribers' copies were 
concerned. Concerning the question of whether the publisher complied with 
the regulations as to marking sample copies I made no inquiry, nor did I 
make any inquiry as to whether he made up special sacks of samples or of any 
copies to go free within the county. 

I must repeat that I found the facts as to the number of subscribers and the 
total number of copies mailed, and that allowing for each subscriber's copy one 
sample copy, whether marked or not marked, or whether such samples were put 
up in separate packages or not, there were no excess mailings. 

It was wholly immaterial to the appeal which I was given to decide, whether 
the publisher's published statement concerning discontinuances was inconsistent 
with what I found to be the facts. The question before me was one of fact, 
and I did not look into or consider whether the publisher was making state- 
ments inconsistent with the facts. Neither did I consider any testimony given 
by any person as to the publisher's practices. The question of whether the 
rubber bands used on the card records containing names of persons whose sub- 
scriptions had expired were rotten had nothing to do with the case. Whether 
the statement of the publisher was disproved by the fact that on October 20, 
1905, seven days after the inspectors' count, there were mailed as to regular 
subscribers 579,125 copies of the November issue in blue wrappers, had no 
weight in my decision. I have already disposed of the question of whether the 
blue wrappers could be taken as evidence. Neither did I consider whether the 
publisher was condemned under any ruling. 

The following is quoted from your memorandum, beginning on page 14: 

" On page 10 of your report it is said : 

11 ' No satisfactory basis for a calculation as to what percentage of the ex- 
pired subscriptions were actually renewed was found. If renewals were made 
after the expiration of a period of eight months (some were carried even longer), 
the original evidence of subscription had by that time been destroyed and the 
renewals were counted as origiual subscriptions are counted. It turns out. 
then, that a person who had subscribed for one year and who had not renewed 
at the end of the year would be carried on the publisher's books as a subscriber 
for six months and possibly eight months. If he renewed within that time his 
subscription was dated to begin at the expiration of the old. If at the end of 
six or eight months he would fail to renew, six or eight copies, as the case might 
be. would have been sent him free. If he had renewed after eight months, which 
appears to have been true in some thousands of cases, the subscriber would be 
treated as new, no charge being made for the copies over and above the number 
due him on the previous subscription. This might happen over and over again 
with the same subscriber.' 

"In the thousands of cases referred to in the above statement, one of two con- 
ditions mast have existed: either the person receiving the publication for eight 
mouths after his subscription had expired was a subscriber, or he was not a sub- 
scriber. If the latter, he was receiving the paper as a sample copy for eight 

86534°— 11 7 



98 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

months after his subscription had expired, and the publisher was violating the 
provisions of the regulation prohibiting the sending of sample copies more than 
three times a year to one person. Of course such copies shoulfi have been pre- 
paid each with a 1-cent stamp. If the former, the publisher was furnishing 
the publication 20 months for 10 cents, which, under your ruling as given on 
page 21 of your report, was a nominal price. The effect of this practice was to 
reduce the annual subscription price in all such cases to 6 cents per annum. 
They could not, therefore, properly be regarded as legitimate subscriptions, 
and each copy so mailed to any such subscriber after the date of expiration of 
his subscription should have been prepaid with a 1-cent stamp. 

" Considering further the question of nominal rates, it is observed that while 
in October, 1905, according to your statement, the publisher had 576,802 sub- 
scribers, he mailed for that month 1,455,215 copies. If, therefore, the adver- 
tised price of 10 cents per annum was received on each of his current sub- 
scriptions the publisher obtained $57,680.20 for copies going 12 times per annum 
to 1,455,215 persons, or at the rate of 3.9 cents per copy per annum for the 
copies mailed for that month. Why did this not reduce the subscription price 
to the nominal rate and how can it be claimed that the issue of the publica- 
tion for that month was entitled to transmission at the pound rate? 

" It is observed that for the year ending December 31, 1905, according to 
page 14 of your report, the moneys received on account of subscriptions to the 
Woman's Magazine were $50,100.04, while according to page 4 of that report 
the publisher was mailing an average of 1,482,355 copies of the publication 
monthly, thus reducing the annual subscription price on those mailed to ap- 
proximately 3£ cents per copy per annum. Using these figures as a basis, it 
appears that while $50,100 was received for subscriptions the publisher was 
paying for postage at the pound rate over $36,000 per annum, making his net 
receipts from subscriptions about $14,000 per annum, while he mailed an 
average of about one and one-half million copies monthly. His compensation, 
therefore, for each copy per annum was about nine-tenths of 1 cent. If this is 
not a nominal rate it would appear to be impossible to find one." 

Answering the foregoing I have to say that so far as my decision was con- 
cerned the table on page 8 of my report represented allowable subscriptions. 
I did not inquire or decide whether the publisher was violating the sample- 
copy privilege by sending copies more than three times to the same persons 
in one year. If he did so he was violating the regulation. The question before 
me was merely one of totals. Did the publisher exceed his privilege at the 
pound rate? The fact that expired subscriptions were carried for eight months, 
or even longer, can not be taken as a basis for determining whether or not 
there are excess copies mailed. 

In determining whether or not there had been excess mailings I did not con- 
sider or decide as to whether or not the publication was sold at a nominal 
price. Consideration of that feature of the case is reserved for section 2 of 
my report, in which I am to deal with the question as to whether the publica- 
tion should be excluded from the second-class rates altogether on the ground, 
among other things, that it is sold at a nominal rate. 

It may be stated, however, that the question of a nominal rate is the question 
of the rate to the subscriber. In other words, adopting the language of Circular 
XXV, it is a question of a fair exchange of value between the subscriber 
and the publisher. No other consideration can enter into it, because, as 
it was pointed out again and again by publishers before the Postal Com- 
mission, if you are to consider the total cost of production, including postage, 
and not postage alone, a copy of probably no publication costs the subscriber 
what it costs the publisher to produce it. Again, so long as a daily newspaper 
is permitted to sell a copy for a cent (which copy costs more than a cent to 
produce) it can not be held that a monthly publication, each copy of which 
costs the subscriber a cent (and which probably costs the publisher no more per 
copy than the daily paper), can be determined to be sold at a nominal rate. 
Not only this, but it is well known that there are established daily papers pub- 
lished in the United States which are sold to their subscribers at an annual 
charge of $1, or less than one-third of a cent per copy. So long as 300 copies 
may be sold at the rate of one-third of a cent per copy in the course of a year 
it is impossible to hold that 12 copies of a monthly publication may not be sold 
for the greater price of 10 cents a year. The law makes no distinction as to 
rates between daily, weekly, or other publications. 

Perhaps we do not understand each other on the meaning of a nominal rate. 
I understand a nominal rate to mean a rate that puts the paper into the hands 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 99 

of the subscriber at a cost which is not real or substantial, but nominal to that 
subscriber. The rate is to be tested by what the subscriber contracts to get 
from the publisher. If the rate per year or per quarter which he contracts to 
pay is not nominal, the fact that the publisher sends him additional copies of 
the publication after the expiration of the subscription, in the hope or for the 
purpose of inducing him to continue, does not affect the contract rate at 
which the publication is issued. The test is what the subscriber actually pays 
or agrees to pay to the publisher in consideration of his paper. I do not under- 
stand how you make out that the carrying of an expired subscription for a num- 
ber of months brings into force the ruling on page 21 of my report as to nominal 
price. The rule applied in my report was to the case where the original sub- 
scription had been sold to the subscriber at less than the advertised price and 
had no reference to whether at the expiration of the term for which the sub- 
scription ran the publisher chose to carry the subscriber on credit, and there is 
no rule in existence which would justify the holding that copies sent to persons 
whose subscriptions had expired should be prepaid by a 1-cent stamp. 

I quote the following from your memorandum, beginning on page 16 : 
" On page 11 of your report you say : 

« ' There is no authority of law for holding that a subscription must be paid 
in advance, and no authority of law for holding that every subscription ter- 
minates at the expiration of the period for which it is written. It is upon this 
construction, existing since the passage of the act of March 3, 1879, that the 
carrying of expired subscriptions is permissible. Of course no publisher se- 
cures a renewal of every subscription carried as a credit after expiration. That 
could not be expected. It is, however, reasonable to expect that a publisher 
should be able to show that he does secure a fair percentage of renewals from 
the persons he carries. He should indeed be able to show that at least two out 
of every three, and certainly as many as three out of every five actually renewed. 
If such a rule had been in existence and applied to this particular case we 
should probably rule out a great percentage of the number of subscriptions car- 
ried as expirations.' 

" You say there is no authority of law for holding that subscriptions must be 
paid in advance, and that every subscription terminates at the expiration of 
the period for which it is written ; yet in the Official Postal Guide for January, 
1905, on page 1041, it is said that ' subscribers within the meaning of the law ' 
include those who ' voluntarily seek and pay for the publication with their own 
money.' 

II How do you reach the conclusion that persons carried as subscribers six or 
eight months after the expiration of their subscriptions, and who have indicated 
no intention or desire whatever that the subscriptions be continued, and who, 
according to the publisher's advertised rule, will not be recognized as sub- 
scribers beyond 30 days after the expiration of their subscriptions, are legiti- 
mate subscribers? Is it fair or logical to place in the same class, and deal 
with alike, publishers who number their subscribers by the hundreds of thou- 
sands and who address themselves to the entire country, and publishers of coun- 
try weeklies who are constantly in close touch with their patrons and have 
either personal acquaintance with them or accurate knowledge of their integrity 
and financial ability? In the case of the large publisher expired subscriptions 
are carried for the clear purpose of being used as the basis for the circulation 
of sample copies at the pound rate of postage. In the case of the country 
publisher there is no such purpose. In the present case the publisher has an- 
nounced to all of his subscribers that if they wish the magazine stopped at the 
expiration of their subscription, they need not give notice to that effect; that it 
will be considered their wish that the publication be discontinued if they do 
not renew promptly when notified that the time paid for has expired. They are 
further informed : 

" ' If you find this paragraph marked, it means that your time is out, and 
that we will stop sending the magazine if not renewed within 30 days.' 

" Is not the publisher to be bound by the rule which he himself has estab- 
lished and announced to all his subscribers? How can he be allowed to claim 
as subscribers persons whose subscriptions have expired for periods of six to 
eight months, when he has declared that they will not be recognized as sub- 
scribers after 30 days beyond the date of expiration of their subscriptions? 

" Significant in this connection is the fact that after the inspectors' investi- 
gation, and when your commission took up their investigation at St. Louis, 
in May, 1906, the publisher changed these standing notices; and in the June 
number, eliminated the 30-day expiration rule, showing an acute change in 



100 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

his policy of treating expired subscriptions. I am informed that until the 
inspectors' count the publisher followed the 30-day rule and did not carry 
expired subscriptions as he now represents to you. He also, after this count, 
changed his system of mailing, which action, according to his own employee 
(Mr. Miller), was to confuse the post-office authorities who were trying to 
ascertain the extent of his legitimate subscription list. What motive can be 
assigned for this sudden change of policy other than that of covering up 
excessive mailings prior to the investigation by the postmaster and post-office 
inspectors in October, 1905, and to safeguard like irregular practices in the 
future against detection? 

" In the case of the country weekly, on the contrary, the publisher accepts 
credit of the subscriber upon faith that he has ability and inclination to pay 
for the publication, and that he desires it to be continued. He would have 
no motive in sending the paper to a subscriber whose term has expired other 
than that of finally obtaining payment for the publication. 

" In the case of the mail-order publisher only a small percentage of renewals 
are obtained from persons whose subscriptions have expired and who continue 
to be carried as subscribers; while, with the country weekly, practically all 
of such persons so carried renew their subscriptions. 

" Should a publication of this kind, characterized by you as a mail-order 
publication, be classed with either the country press or with the large and 
established magazines which are desired for their literary merit, and which 
are sold for substantial prices at news stands, and generally mailed in bulk, 
only a small proportion being sent in single wrappers to individuals through 
the mails? 

" On page 12 of your report you state : 

" ' So far we have never had any ruling at all on this subject other than the 
one quoted from Circular XXV, and it is indefinite as to proportion and length 
of time, and so far as it goes has not yet been applied in a single case.' 

" The provision of the circular referred to is: 

" ' Expiration subscriptions may be carried when necessary for a sufficient 
time to enable the publisher to ascertain whether it is the intention to renew. 
After the expiration of such reasonable time they will no longer be recognized 
as actual subscriptions, and in all cases the ratio of expired subscriptions to 
the whole list, irrespective of time carried, will be considered and given weight 
in determining the legitimacy of lists of subscribers and the primary design of 
the publication.' 

" Do not Sections II and VIII of the syllabus prepared in your office on 
decision of the supreme court of the District of Columbia in the case of 
Conant v. Postmaster General apply to this case? The sections read as follows: 

" ' II. Where a considerable portion of the persons listed as subscribers 
appear to be those whose subscriptions have expired; held, that such persons 
could not reasonably be counted as a part of the legitimate list of subscribers.' 

" ' VIII. While the statute does not put any express limitations upon the 
number of sample copies circulated, such copies must be samples in fact, and 
the publisher wishing to obtain the benefit of the section must show the 
utmost good faith, and not attempt to evade it by any device.' 

"According to your table the current subscriptions for November of 1905 
were 581,707 ; the mailings that month to those whose subscriptions had 
expired were 404,881 copies, and in addition to this there were 531,676 samples 
so marked. Considering the large number of samples mailed that month, 
is not 404,881 copies a ' considerable portion ' within the meaning of para- 
graph II of the above-mentioned syllabus? If so, should it not be held (as 
it was in the Conant case) that such persons could not reasonably be counted 
as a part of the legitimate list of subscribers? 

" Should not the lack of ' utmost good faith ' on the part of this publisher, 
and his attempt to 'evade' by 'devices' the limitations upon the sample-copy 
privilege, be applied to this particular case, as referred to in paragraph VIII 
of the syllabus above quoted? 

" On page 20 of your report you quote a provision of Circular XXV as to rates 
and numbers of subscriptions, and state that ruling of Circular XXV to be 
applicable to this case. Why is one ruling of the circular applicable and 
not another? And what is the basis of your construction on page 10 of 
your report that the expired subscription ruling in Circular XXV does not go 
to the legitimacy of lists of subscribers as applied to excess mailings as well 
as to the primary design of the publication? In this connection attention is 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 101 

on Hod to the January, 1905, Postal Guide, page 1040, paragraph 7, which 
states: 

M ' Under the act of March 3, 1S79, a publication, to be admissible to the 
second class of mail matter, must, in addition to complying with the other 
requirements of the law, have a " legitimate list of subscribers." This list 
of subscribers must be legitimate in its entirety. And the sending of copies 
free to the recipients thereof to a number in excess of the number sent to 
actual subscribers will be taken as evidence that the primary or chief purpose 
of the publication is not to meet a real demand on the part of subscribers, but 
to secure a forced circulation, within the prohibition of the statute against 
publications " designed primarily for advertising purposes, or for free circu- 
lation, or for circulation at nominal rates." ' 

"According to your own tables, it is shown that this publisher is sending 
free each month copies of the Woman's Magazine in the following numbers 
in excess of those sent to actual subscribers : 

Excess. 

" October, 1905 852, 034 

775, 434 

76, 600 

November, 1905 9S6, 588 

762, 296 

224, 292 

December, 1905 1, 127, 898 

778, 971 

348, 927 

January, 1906 1, 182, 854 

774, 355 

408, 499 

February, 1906 1, 176, 921 

784, 304 

■ 392, 617 

March, 1906 1, 138, 868 

S06, 728 

332, 140 

April, 1906 1,184,291 

820, 638 

363, 653 

2, 146, 728 

" making, according to your table, 2.146,72S copies of the Woman's Magazine, 
which were mailed neither to subscribers nor as sample copies. It was evi- 
dently the duty of the postmaster, under the regulations, to collect advance 
postage on these copies at the rate of 1 cent a copy, which would amount to 
$21,467.28. Waiving the provisions of Circular XXV, under what construction 
of this rule can it be held that these copies of the paper were entitled to admis- 
sion to the mails at the pound rate? It is shown beyond controversy, and is 
admitted, that they were not sent either as current or expired subscriptions. 
Neither were they marked and sent as samples, as is required by the regula- 
tions. Is it possible that the publisher, by refusing to obey the regulations 
requiring «ample copies to be so marked, can be permitted to send out any 
number of copies to persons who are not subscribers, at the pound rate? 

" Further, under what construction, as argued on page 10 of your report, 
can copies of the publication sent free in excess of the number sent to actual 
subscribers come within the prohibition of the statute, as applied to the ques- 
tion of primary design of the publication, and yet not come within such prohibi- 
tion as applied to a question of excess mailings. Attention is called to your 
conclusion on page 14: 

" ' but it is not clear that the income from subscriptions, both new and re- 
newals, indicates a percentage of renewals great enough to warrant the carry- 
ing of such a proportion of expirations,' 

"and also to the fact that while from December, 1905, to April, 1906, both 
inclusive, copies mailed by him to persons whose subscriptions had expired, 
according to your table on page 8, gradually increased from 175,494 to 292,747, 
yet the current subscriptions decreased from 603,477 to 527,891. 

" Under what construction do you hold that there is no reduction from the 
nominal price in a case where the publication, as in this instance, is sent in 



102 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

many thousands of cases free for 8 months after the subscription term has 
expired, or a total of 20 months for the annual subscription price of 10 cents, 
or at the rate of 6 cents per annum, while holding that there is a reduction 
from the nominal price when under a clubbing arrangement the publication is 
sent at the price of 6 cents per annum or less, as indicated on pages 21 and 22 
of your report? 

" The table on page 8 of your report shows the publisher to be entitled, in 
your judgment, to carry expired subscriptions for the month of December, 1905, 
to the number of 175,494, and his current subscriptions for that month to be 
603,477. That table also shows that, in your opinion, the publisher was en- 
titled to carry for the month of April, 1906, expired subscriptions to the num- 
ber of 292,747, and that his current subscriptions were 527,891. Thus it is 
indicated that the current subscriptions to the publication for the month of 
April were 75,586 less in number than those for the month of December pre- 
ceding ; but you have allowed as legitimate, for the latter month 117,253 more 
expired subscriptions to the publication than you have allowed for the former. 
The claiming by the publisher of this additional number of expired subscrip- 
tions seems to admit of but one interpretation, viz, that he requires that number 
to free himself from the charge of mailing in April more copies than he was 
legally entitled to mail. But how do you reach the conclusion that such claim 
is proper and that the publisher should have the benefit of what seems to be 
a. mere subterfuge? 

" Why, for the month of October, 1905, is this publisher granted such ex- 
tended expiration privileges to either magazine, when, according to the state- 
ment of his ex-employees, the inspectors, the postmaster, and his 50 clerks, 
who made the count October 13, 1905, he was not using his expired subscrip- 
tions regularly to exceed four months in the case of the Woman's Farm Journal, 
or to exceed three months in the case of the Woman's Magazine? If, as stated 
by you on page 12, the necessity of a rule fixing definitely the proportion of 
expired subscriptions which may be carried, and the time for which they may be 
carried, has frequently been felt, why has not such a rule been made? And 
if, as you state on page 15 of your report, the publisher of the Woman's Maga- 
zine is violating the spirit of the second-class privilege, why is not such a rule 
now applied?" 

I feel satisfied that your first question in the above quotation arises from a 
misconception of the whole second-class problem ; is is certainly due to a mis- 
conception of what I decided in my report. That report was complete upon 
the one question of excess mailings under the ordinary, everyday practice of 
publishers and the ordinary, everyday practice of the department in dealing 
with the second-class problem. 

The term " voluntarily seek and pay for the publication with their own money," 
which you quote, does not apply at all. I allowed certain subscriptions to be 
carried after expiration, but I did not decide, as you seem to think, that per- 
sons whose subscriptions are so carried are " legitimate subscribers." The 
statute does not require " legitimate " subscribers, but it does require a " legiti- 
mate list of subscribers." A legitimate subscriber and a legitimate list of sub- 
scribers are different matters. What I decided was that under existing rules 
and practices there were no excess mailings. I found and reported a great 
volume of expired subscriptions and that they were carried for a long period, 
and I endeavored to show that there was no rule under which we could in 
this case, standing by itself, decide that there was an excess mailing, upon the 
ground that the expired subscriptions were too many or too long carried, or 
both, and I gave my reasons for that conclusion. 

I did not consider or decide whether it is fair or legitimate to deal with 
publications like the Woman's Magazine under the same rules that we deal 
with publications like country weeklies. I indicated plainly that I regarded 
the second-class privilege abused by the carrying of such a volume of expired 
subscriptions and for such a length of time; but that, in view of the pub- 
lisher's repeated statements that he would abide by any rule of the department, 
once known to him, and in view of our common practice from day to day and 
our promise to Messrs. Bromwell and Weinschenk to publish «tll rules and give 
notice of their taking effect, we could not now, in justice, make a rule for this 
case alone; and even if we did, we are bound in common decency to give 
notice and allow the publisher some time to adjust his business accordingly. 

I did not consider or decide whether the expired subscriptions were being car- 
ried for the purpose of forming a basis for the circulation of sample copies at 
the pound rate, or whether the publisher fulfilled or did not fulfill his announce- 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 103 

ment to his subscribers concerning the stopping of the magazine at the expira- 
tion of subscription. That question was immaterial to the issue which I was 
to decide. 

I did not consider or decide whether the publisher was bound by the rule 
which he himself published, because it was immaterial and was none of my 
business. Whether the volume of expired subscriptions and the length of time 
carried vitiates the whole list and makes itf" illegitimate has not been decided. 
That question is to be dealt with in Section II. 

I did not consider or attempt to assign a motive for the change in the policy 
and practice of the publisher in the matter of carrying expired subscriptions, 
as announced in the publication. It may be that this sudden change of practice 
was for the purpose of covering up the extent of his mailings prior to the investi- 
gation by the postmaster and the post-office inspectors in October, 1905. Such 
a matter is wholly immaterial to the question of excess mailings of the issues 
covered by my investigation. 

We have no authority for making rules regarding the circulation of mail- 
order publications different from those made for all other publications. Practi- 
cally all of our great magazines are mail-order publications, but the mail-order 
publication, as such, is not recognized by law, and so far as a legitimate list of 
subscribers is concerned the law requires the same of all. We do not, in general 
practice, consider mail-order publications in the same light and under exactly 
the same interpretations as we apply to the established magazines or to the 
country press. That should be clear by what has gone before in this document 
(see, for instance, page 52) ; but I do say that whatever rules are adopted for 
dealing with any class of publications should be published and due notice given 
as to when they will be in effect, in accord with the policy outlined in the 
Bromwell-Weinschenk letter. 

Sections II and VIII of the syllabus in the case of William Cowper Conant v. 
The Postmaster General do not apply to this case. There the question was on 
the legitimacy of the list as a whole. This question is one of excess mailings. 
The syllabus contains no rule of limitation upon credits (expirations) which 
would enable us to decide whether the rule had or had not been violated by 
this publisher by the volume of, or the length of time he carried, expired sub- 
scriptions. If the number of expired subscriptions be " a considerable portion " 
of the list, it is evidence on the side that the list as a whole is not legitimate 
within the intent and purpose of the law ; that is what the syllabus means. 

The " utmost good faith " mentioned had nothing to do with the question of 
excess mailings. As stated before, that was a mathematical question purely. 
It may be that on a question whether the list of subscribers is legitimate as a 
whole the matter of good faith would have weight. 

It is not true that the rules in Circular XXV, applicable and in effect, were 
not applied to this case. All the rules in the circular except the " paid-for-by- 
others" rule (the stock-journal case) were applicable and were applied. The 
rule in Circular XXV as it applied to the kind of subscribers in the stock-jour- 
nal case and others of that kind had been suspended. That made it impossible 
to apply the rule in other cases where the same principle is involved. 

I can not state more plainly than I have repeatedly stated already that Cir- 
cular XXV contains no rule of limitation as to number of expired subscriptions 
or time carried which we could apply to this particular case in order to decide 
the question of excess mailings. We would not be justified in saying that the 
publisher 7 could carry no expired subscriptions, because that would be applying 
a rule to him that had never been applied before, and. could not legally be 
applied to any publisher. Nor could we say that this particular publisher 
might carry expired subscriptions one, two, or three months and only in a cer- 
tain proportion to the whole list, because to make such a rule for one is to 
make it for all. If there had been such a rule in existence and known to the 
publishing world we might have applied it to this case to determine whether or 
not there were, excess mailings ; but having none, we can not invent one for 
this case alone. 

The rule you quote from the January, 1905, Postal Guide touches the question 
of the legitimacy of a subscription list as a whole, and not excess mailings. 
Your quoting it leads me to the belief that you have not clearly in mind the 
difference between the questions, first, whether the advertised price of a pub- 
lication is itself nominal, and second, whether a reduction or rebate to the sub- 
scriber makes it nominal, regardless of what it may be advertised to be. The 
question of whether the rate is nominal is a question of whether it is nominal 
to the subscriber. 



104 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

Concerning the table on page 21 of your memorandum, above quoted, nothing 
more need be said than has already been said — that there were no excess mail- 
ings if we allow the expirations to be counted as subscriptions; and we have 
no rule as to expired subscriptions applicable to the case upon which the ques- 
tion of excess mailings could be determined. I do not understand what you 
mean when you say : " It is shown beyond controversy, and is admitted, that 
they were not sent either as current or expired subscriptions." 

I have already explained a number of times that the question of the primary 
design of the publication has not been decided, and that that question had 
nothing to do with the question of excess mailings, which was a numerical one — 
a question of totals. 

The extension of credit by a publisher to a subscriber after the expiration of 
a subscription has nothing to do with the question of whether the subscription 
price which has been paid, or which will be paid if there be a renewal, is 
nominal. Expired subscriptions are carried on the theory that all may be 
renewed, although in practice it is found that only a certain percentage renew. 
The difference between allowing expired subscriptions and disallowing those 
secured through clubbing arrangements, whereby the publication is sold to the 
subscriber at a reduction from the advertised price, is very plain. You do not 
appear to discriminate between the price paid by the subscriber and the amount 
received by the publisher after allowing compensation to the agent. It is not a 
question of what the publisher gets for his publication, but a question of what 
the subscriber pays. I ruled out all subscriptions given as premiums with the 
purchase of articles of merchandise or in clubbing arrangements where the 
publication was sold to the subscriber at less than the advertised price. 

The variation in the number of expired subscriptions in the different months 
covered by the investigation is the result of a great variation in the number of 
subscriptions received in different months. The method of ascertaining the 
number of expired subscriptions carried on given dates is explained in detail in 
the commission's report, beginning on page 9, and in the exhibits therein re- 
ferred to. I found the facts as to current and expired subscriptions and as to 
total mailings ; but as to whether the publisher designed to make the expired 
subscriptions of greater volume one month than another for the purpose of 
justifying the total mailings was not looked into. It was all a question of 
fact, namely, what number of subscribers were there at the precise time the 
mailings took place, and what number of expirations were being carried at that 
time, and what was the total number of copies mailed at the time. I found the 
facts and so reported. If the number of current subscriptions at any mailing 
and the number of expired subscriptions carried at the time of that mailing 
taken together were less than half the number of the total mailings, the pub- 
lisher exceeded his privilege; but it was not so found. Possibly the publisher 
was guilty of subterfuge, but I did not inquire into that matter because it would 
make no difference. Under my ruling expired subscriptions were allowed only 
because there was no rule of definite limitation in existence that could be 
applied to the case for the purpose of determining whether or not there was an 
excess mailing. I could not justly invent a rule of definite limitation applicable 
to this case alone in order to determine whether there was or was not an excess 
mailing. The statements of ex-employees, of inspectors, of the postmaster, of 
the publisher, or of others concerning the count made October 13, 1905, were not 
considered by me. The duty cast upon me was to determine whether or not 
there was an excess mailing with certain issues. In deciding I applied the 
uniform practice of this bureau in dealing with the second-class problem. The 
investigating commission found from the orders of subscribers themselves, and 
other tangible records, the indisputable facts as to subscriptions, and the state- 
ment of no person whatever was given weight. In my decision I considered 
only the facts as found. 

The reason why a definite rule fixing the proportion of expired subscriptions 
to the whole list which may be carried, and the time which they may be carried, 
has not been made, is because we have not reached that stage in our reform 
work where that action would be warranted. We can not do all things at 
once. The situation in the publishing industry has for some time been very 
delicate. We are not executing a new law, but we are endeavoring to get 
back to the principles and intent and purpose of an old law, the administration 
of which has for long years been neglected by the department. 

Another reason why we have never made such a rule is because there has 
always been serious doubt whether, in its application, we would be sustained 
by the courts; and it has always been deemed better, in proceeding against 



RELIEF OP THE LKWIS PUBLISHING COMPANY. 105 

what are believed to be abuses of the second-class privilege, to follow a course 
which has already received judicial approval than to risk the success of the 
reform by having a doubtful ruling brought to test. 

The following is quoted from your memorandum, beginning on page 24: 

•* On page 20 you say : 

" ' I hold that the publisher of any publication sold as low as 10 cents a 
year is not entitled to make any reduction whatever in the price to subscribers 
by any process whatever, directly or indirectly. I deem it proper to enforce 
such a ruling in this instance, and therefore reject all those subscriptions 
where the alleged subscribers paid less than the advertised price, on the ground 
that they do not constitute actual subscriptions.' 

" How, then, can you hold that persons whose subscriptions have expired and 
whose names are carried for S months thereafter, and who, upon renewing 
subscription receive the publication at the fixed price of 10 cents from and 
after the date of the renewal, are legitimate subscribers? Is not the total 
term for which the publication is thus received by such persons at the price 
of 10 cents 20 months? In other words, the publication is paid for for 
12 months, and at the end of that time the publisher continues to send it 
for 8 months longer without charge. Does not the publication thus go to 
the subscriber, whose subscription has expired, for 8 months, at the rate 
of 6* cents per annum? And do you not hold any subscription rate below 
10 cents per annum to be nominal? You say, moreover, that the proceedings 
outlined occur over and over again, and it is clear that each repetition reduces 
still further the annual subscription rate. The effect, of course, is precisely 
the same whether the subscription is renewed or not after 8 months from 
expiration." 

I did not hold, as you seem to think, that persons whose subscriptions had 
expired and whose names were carried S months thereafter and who, 
renewing their subscriptions after that period, would receive the publication for 
20 months for the first 10 cents, were " legitimate subscribers." The law does 
not require " legitimate subscribers ; " it requires a " legitimate list of sub- 
scribers." 

No; I have not held that any subscription rate below 10 cents per annum 
is nominal. What I held was that where the advertised price was fixed by the 
publisher as low as 10 cents any reduction from that price to the subscriber 
by rebate or otherwise rendered that subscription at a nominal rate, and there- 
fore not an actual subscription, and as many of such alleged subscriptions as 
were found were ruled out in my report. That ruling is in perfect consonance 
with the provisions of Circular XXV. 

I quote the following from your memorandum, beginning on page 25: 

" On page 16 of your report you state : 

" ' During this publisher's trouble with the postmaster at St. Louis a con- 
siderable sentiment in his behalf was created throughout the country. Many 
people seemed to believe that he was being abused or ill-treated, and some, as 
a measure of assistance to him, paid for copies of the Woman's Magazine to 
be sent to third persons which the publisher himself should select. Large 
numbers of copies were sent out under this arrangement, but it was only a 
temporary condition and applied to only occasional issues. 

" ' Under the rules of Circular XXV, if in force, the great bulk of the alleged 
subscriptions paid for in this way would not be acceptable at the pound rate. 
They would be subject to the transient rate of 1 cent for each 4 ounces or frac- 
tion. That rule, as you will recall, has been set aside in the case of the stock 
journals, which* are by far the worst offenders in this regard in the country, 
Their practices are one of the worst abuses of the second-class privilege. The 
circumstance that we suspended this rule in the case of the stock journals makes 
it impossible in fairness to now apply the rule to the Woman's Magazine, espe- 
cially so because in that case it was but a small fraction of the. whole circu- 
lation to subscribers, while in the case of the stock journals it constitutes the 
bulk of their circulation and is the basis of their so-called legitimate list of 
subscribers. With them the practice is permanent and continuous in the face of 
their knowledge of the department's ruling, while so far as we know this pub- 
lisher is ignorant of the ruling. 

" 'Another reason why it would be unfair to enforce this ruling in this instance 
is that recently when the riding was brought to judicial test in the case of the 
Iowa Homestead and the department was sustained by the courts, we refunded 
to the publisher the 4-ounce rate and permitted the copies paid for by others to 
be mailed at a cent a pound to the end of the publisher's contract with the 
persons interested in the circulation of the paper for business reasons.' 



106 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

" On what information is your statement based that for reasons of sympathy 
with this publisher, because of his ' trouble ' with the postmaster at St. Louis, 
many people, as a measure of assistance to him, paid for copies of the Woman's 
Magazine to be sent to third persons whom the publisher himself should select, 
and that under this arrangement large numbers of copies were mailed, but that 
it was only a temporary condition and applied only to occasional issues? 

" My information is that the 'trouble ' of the publisher with the postmaster at 
St. Louis did not begin until October 11, 1905. The publisher, however, has 
declared in a letter dated November 20, 1905, that as early as the previous 
June he had mailed 48,544 copies of the Woman's Magazine to persons whose 
subscriptions were paid for from a special fund of $10,000 provided by his 
friends and sympathizers, and that the names of such persons had been selected 
by him at his discretion. In the same letter the publisher stated that he sent 
in a similar fashion 92,100 copies of this publication for July, 60,090 copies for 
August, and 85,147 copies for September. The publisher has failed to sub- 
stantiate his statements as to the existence of any such fund or that any such 
contributions have been made ; nevertheless, his claim is that there was such a 
fund, and the effect of his statements is that it was in existence prior to the 
time when his trouble with the postmaster began. Have you any information 
as to the amount of such contributions, and by whom they were made? If so, 
please furnish it. 

" On page 17 you state that these paid-for-by-others subscriptions, which you 
state were sent out in large numbers, would not be acceptable at the pound 
rate under the rules of Circular XXV, if in force. That circular, which was 
issued December 16, 1905, was sent to the postmasters at St. Louis and other 
cities with instructions to notify publishers and to make it effective April 1, 
1906. The postmaster so notified this publisher in the latter part of December, 
1905, and on April 6 took action under such instructions by charging the tran- 
sient second-class postage on such excess mailings. 

"Among the instructions as to examination of second-class matter on page 
1036 of the January, 1905, Postal Guide, of which the postmaster was obliged 
to take cognizance, is the following: 

" 'Postmasters are reminded that under the law (sec. 373, Postal Laws and 
Regulations) they are liable on their official bonds for loss of revenue due to 
faulty administration or neglect.' 

" In addition to this, your letter of April 6, 1906, to the postmaster at 
St. Louis, in answer to an inquiry as to whether he should take action on the 
April, 1906, mailings of this publication, states: 

" 'Inasmuch, however, as it is the duty of the postmaster to charge the law- 
ful rate on matter passing through his hands, it would be your duty, whenever 
the facts before you justify you in holding that the copies are in fact excess 
copies, to charge upon such excess the rate I have already mentioned, namely, 
the transient second-class rate.' 

" Why was the action of the postmaster not proper, and why should not the 
money collected by him be retained, when he acted directly under your instruc- 
tions? Have you at any time notified the postmasters of the country that the 
provisions of Circular XXV were suspended or revoked? 

"Apropos of the statement of this publisher that ' he had sought to observe 
every known rule and limitation of the Post Office Department in the conduct 
of his business, and if it were found that any practice or method of his was in 
conflict with the rules he would immediately amend the same, for he stood 
ready to meet all requirements as soon as he could find out what those require- 
ments were,' your attention is directed to the following statement taken from a 
letter written by F. J. Cabot, the secretary of the company, to one of its em- 
ployees : 

" ' In other words, the less they (Post Office Department) know of our busi- 
ness the better. I have nothing to hide, but I'll be d d if I want them to run 

our business or even know what we are doing.' 

" The refunding of the 4-ounce rate to the publisher of the Iowa Homestead, 
referred to by you on page 17 of your report, was recommended by you, and the 
memorandum signed by me, now in the case, was prepared in your office and 
submitted to me by you, with your recommendation that I approve it. The cir- 
cumstances in that case were peculiar to that publication, and it was solely by 
reason of those special circumstances, as stated in the memorandum, that the 
course recommended by you was pursued. It is shown by your report that the 
position taken by the department in that case, namely, that subscriptions paid 
for by others were not legitimate, was sustained by the courts. This being true, 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 107 

why is the department not warranted in making the most of that decision and 
treating as illegitimate such subscriptions in this case, in respect of which you 
state your belief 'that the publisher of the Woman's Magazine is violating the 
spirit of the second-class privilege,' etc.? 

" That other publishers are abusing the second-class privilege is of no rele- 
vancy in the consideration of this case. In the two instances you have cited, in 
which, as a matter of fact, there has been as yet no such thorough investigation 
as has been made in this case, action was merely suspended pending a report of 
the Postal Commission, with the distinct instruction conveyed by me that if no 
legislation was enacted by Congress the cases should be taken up for disposition 
under our present statutes. When you have sufficient information that other 
publishers are guilty of such flagrant abuses, then your duty will be plain ; you 
should promptly take up such cases and deal with them according to the law and 
the facts. Neither is it proper that in deciding this case you should take into 
view the question of expediency or policy. Your decision in this matter should 
be based exclusively upon the law under which you are proceeding and the evi- 
dence before you. Nor is it important whether the investigation was instituted 
upon your motion or at the instance of the Postmaster General or some other 
officer of the Post Office Department; the abuses must be corrected, whether dis- 
covered by officers of your bureau or those of other bureaus of the Post Office 
Department Your instructions were to take this case under consideration, 
examine all the evidence available, and to base your decision solely upon the law 
and the evidence. 

" You notified me when this case was submitted to you that you expected 
shortly to take up the consideration of this class of periodicals. Why is not 
your investigation in this case, which you say on page 18 of your report ' is un- 
usual in that, so far as known, never before have any publisher's business 
methods been subjected to such a raking scrutiny,' properly the beginning of 
such scrutiny of such periodicals? As you say, on page 19 of your report, 'the 
wisdom of singling out one or two publications to be dealt with in advance of 
being ready administratively to handle the class as a whole may well be 
doubted,' and its unwisdom as a general proposition was fully realized by me 
when the case was turned over to you. There can be, however, no question as 
to my duty and yours in dealing with practices which are illegitimate when 
found in any class of publications to which existing law and regulations prop- 
erly apply. This aspect of the case was fully understood and my desires con- 
cerning it clearly stated in repeated conferences with you regarding the case. 
According to your own figures, it is not necessary to deal with the abuses pe- 
culiar to any particular class of publications to find in this case practices which 
when disclosed in the business of any publisher call for departmental action." 

My statement that there was sympathy for the publisher is based upon the 
record. I have already submitted to you Exhibit 41, which contains the record. 
It was sent you under date of February 25. This exhibit also contains evidence 
that persons paid for copies of the Woman's Magazine to be sent to others than 
themselves. The statement that it was only a temporary condition was based 
upon the fact that no such alleged subscriptions were among the current or 
expired subscriptions found by the investigation commission. The mailing of 
such copies had ceased, so far as we could ascertain. 

I do not know the date when the trouble of the publisher with the postmaster 
at St. Louis began. The publisher has had two hearings before this office, 
June 17, 1905, and April 30, 1906. They are referred to in the previous part of 
this correspondence. The publisher seemed to feel that his trouble began as 
long ago as the first hearing. Whether he is right or not has nothing to do 
with the -question before me. Nor did the question of the size of the special 
fund, which you state was $10,000, have anything to do with the case. I merely 
mentioned the circumstance. 

Concerning your statement that the publisher failed to substantiate his state- 
ments as to the existence of any such fund, or that any contributions had been 
made for the purpose claimed, I think the answer in Exhibits 37 and 41 — which 
I sent you and which show that, as a matter of fact, there was such a fund 
amounting to $8,250 according to the publisher's books — is complete. 

The postmaster was right in demanding under the rules the transient second- 
class rate on excess mailings if he had conclusive evidence that there were excess 
mailings, or if he was not satisfied from evidence submitted by the publisher 
that he was entitled under the rules to mail as many copies as he offered; but 
he can not lawfully hold up a citizen's mail upon a mere guess. The amount 
which the publisher was required to deposit to cover postage upon copies alleged 



108 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

to be in excess mailed with the April, 1906, and succeeding issues was based 
upon a count of only the current subscription cards in the files of the pub- 
lisher several months previous, that is, on October 13, 1905. Manifestly the 
conditions existing on that date were not conclusive evidence that there were 
excessive mailings with issues upon which the excess postage was demanded 
several months subsequently thereto. 

If the postmaster had been acting under instructions of this bureau in the 
ordinary course of business in dealing with publications like the Woman's 
Magazine, I have already shown that the question of excess mailings would 
not have been raised, but the broader question of the right to second-class entry 
at all would have been the issue. However, the case had come to that state 
when it was turned over to me that the question of whether there were or were 
not excess mailings, regardless of the type of publication and regardless of the 
practice in that regard, had to be settled upon the principle which governed 
my decision. I found and reported that, as a matter of fact, there were no 
excess mailings. The reason that I stated that the " paid-for-by-others " sub- 
scriptions were not entitled to the pound rate under the rules of Circular XXV, 
if in force, was because it is held in practice that copies of the publication so 
sent are not sent by the publisher in response to subscriptions sent to him by 
the recipients of the copies; they are sent at the instance of others interested 
in the circulation of the publication for some reason or another, and therefore, 
as in the Stock Journal cases, they are not sent by the publisher as to sub- 
scribers within the meaning of the law, and the publisher can not confer upon 
others acting through him the right to the pound rate. When acting for such 
purchasers it is held that the publisher must pay the rate which the buyers of 
the copies would have to pay if the copies were mailed by them, namely, the 
transient rate. This is the stock-journal question over again. The pound rate 
is only for publishers and news agents. 

The copies might have been sent in bulk at the pound rate to the persons who 
paid for them, but the publisher could not mail the copies for those persons 
to the individual addresses named by them or selected for them by himself. 
Circular XXV having been suspended in this very particular, and the copies 
in question having been mailed in the past, the transaction not being current, 
we could do nothing. 

The reason why the postmaster should not retain the money now held by him 
on alleged excess copies is because, as a matter of fact, there were no excess 
copies mailed. If he took deposits under instructions from this office then it 
was upon his assumption that there were excess copies mailed. An impartial 
investigation and treatment of the case, under the usual practices of this bureau, 
prove this to be not true. 

The statement of Mr. F. J. Cabot, the secretary of the company, was not 
material to any question before me. I found the facts. 

You state that the refunding of the 4-ounce rate to the publisher of the Iowa 
Homestead was recommended by me. That is true ; but I recommended it be- 
cause of the conditions. The following is the exact language of my memoran- 
dum of June 14, 1906, in which the recommendation was made : 

" The question involved in this case, as in the stock-journal cases, is whether 
the department should permit to be counted as forming, in whole or in part, 
the ' legitimate list of subscribers ' copies ordered and paid for in large quanti- 
ties by persons desiring to circulate the paper for reasons of their own, which 
copies are mailed by the publisher to persons designated by such purchasers 
without orders from the parties addressed. In the Homestead case so-called 
subscribers of this character formed but a small part of the whole list. This 
part of the circulation the department held to be subject to the transient second- 
class rate in the same manner as if copies had been sent directly from the bulk 
purchaser to the addressee. 

" In the stock-journal cases substantially the entire subscription list is made 
up of these bulk orders. The effect of applying the principle sustained in the 
Homestead case would be to rule these latter publications out of the second 
class, for they have substantially no other list of subscribers upon which to base 
a claim to the privilege. 

" The practice common, both to the Homestead case and the stock journals, is 
a trafficking in the special privilege accorded the publisher to enable him to 
respond to a public demand from actual subscribers, for the maintenance of 
which privilege the public is taxed. Under the practice referred to the publisher 
sublets, so to speak, his second-class rates to third parties, who, acting on their 
own account, would be entitled to no such privilege. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 109 

"Having in mind that the principle governing both classes of publications 
is the same, the equitable and proper course in dealing with the Homestead 
deposit would seem to be to cover the money into the Treasury if similar cases 
were to be dealt with in the same manner. The Homestead case having been 
expressly ruled upon, and the postmaster being actually in possession of the 
money deposited at the higher rate, the department is in a position fully to 
enforce the principle it contends for. It would be no objection to such enforce- 
ment to say that other publications indulging in the same practice had not yet 
been dealt with, because obviously all publications could not be dealt with as 
of one date. All that could reasonably be asked is that the department should 
be proceeding with due diligence so to deal with them. If, however, a whole 
class of publications, such as the stock journals, guilty of greater infractions of 
this principle than the Homestead, are to be unmolested for a definite period, or 
until the happening of some definite event, such as the appointment and report 
of a commission, then it seems to me that it would be unequal, and thorefore 
inequitable, to insist upon a full payment by the Homestead company because 
of the circumstance that its case happened to be dealt with at an earlier stage, 
and was judicially sustained, and because the department is physically able to 
lay its hands upon the money." 

As showing the consistency of the dealings of this office in similar cases, I 
herewith submit a copy of the memorandum addressed to you under date of 
July 10, 1906, where the same question, with some slightly different shading, 
arose in the case of the Pacific Churchman : 

" Referring to our several conferences on the subject of illegitimate lists of 
subscribers, that is to say, lists made up in a more or less degree of alleged 
subscriptions paid for by third parties for advertising purposes, etc., there 
comes to me, in due course, this morning from the division of classification, a 
ruling on the case of ' The Pacific Churchman.' It is made under the provisions 
of Circular XXV, exceptions to which have just been made as to the bulk sub- 
scriptions by commission merchants to stock journals for third persons, and in 
the ' Iowa Homestead ' case, and as to ' political ' subscriptions. 

" Scarcely any two questions of this character are identical. This one varies 
in that just one person, namely, the bishop of the diocese, is to pay for the 
entire bulk of the subscriptions. In the other cases the so-called subscriptions 
are paid for by a number of commission merchants, or by several campaign 
committees, or candidates for office, etc. This case involves the same principle 
and it has in addition the merit of not being for a commercial purpose. The 
copies to be sent as to subscribers will not further private business or political 
interests. There is, too, a sort of public character to the information sought to 
be distributed, and it would seem that the proposition is entitled to indulgence 
on the score of sound morals as long as we indulge the others. 

" With your approval I will reverse the ruling of the division of classifica- 
tion and authorize the mailing of the copies of the Pacific Churchman, paid for 
by the bishop of the diocese, as if sent to actual subscribers. I shall base the 
reversal on the ground of analogy to the Iowa Homestead, the stock journal 
and political subscriptions decisions, and that there is a consideration favorable 
to this proposition in that it is not for the advancement of private interests. I 
shall also base the reversal on the ground that Congress has authorized a com- 
mission to consider and report upon the whole subject of second-class mail 
matter. 

" I know the danger of such a ruling in dealing with the flood of similar ques- 
tions which is sure to follow, but we can not be unfair or unjust. To rule 
otherwise would be to make fish of one and flesh of another in an offensive way." 

You approved the foregoing recommendation, and action was taken accord- 
ingly. 

All of this irregularity you will note grows out of the fact that paid-for-by- 
others subscriptions were allowed to stock journals, and that we could not in 
good morals deny a privilege to other publications which once suspended as to 
stock journals had been restored to them. 

The action of the court in sustaining the department in the rulings on the 
Homestead case should have been followed by the covering of the deposits of 
the publisher into the Treasury instead of returning them to him, and the 
applying of a like ruling to all similar cases throughout the country; but the 
suspension of the provisions in favor of stock journals and political subscrip- 
tions, as shown by the memorandum quoted, rendered such action inconsistent, 
unfair, and immoral. 



110 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

You say that the fact that other publishers are abusing the second-class 
privilege is of no relevancy in this case. I do not understand what you mean 
by that. It can not be that you mean that one publication should be singled 
out of a class and dealt with in some extraordinary way out of accord with 
the general policy and practice as to the class in which it belongs? I did not, 
however, decide whether or not the Woman's Magazine is an abuse. I did say 
that I thought the publisher was abusing his privilege as to carrying expired 
subscriptions, but the abuse of the publication and its mailings as a whole and 
an abuse in the practice of carrying expired subscriptions are two different 
matters. You are correct as to no such thorough investigation having ever 
been made in any case as in the Woman's Magazine. I have already shown in 
this communication that we never dealt with any case before as we have with 
this one. (See pp. 70, 78). The suspension of the progress of the reform 
work of which you speak, pending the ascertainment of whether there would be 
any legislation by Cougress on the subject of the second class of mail matter, 
has only just been lifted. Your letter is dated February 12. My report on the 
excess question was submitted to you on February 5. 

You say that when I have sufficient information that other publishers are 
guilty of such flagrant abuses my duty will be plain. I do not quite under- 
stand you. I do not know whether you refer to the abuse of carrying expired 
subscriptions in too great a proportion and too long, or whether your state- 
ment is as to the publication as a whole. We now know that there are many 
abuses in the mail-order type of publication, as that term is generally under- 
stood, much more flagrant than in the case of the Woman's Magazine, but I 
have not reported that it (the Woman's Magazine) is or is not an abuse, taking 
the business as a whole. 

You say that I should take cases up promptly and deal with them according to 
the law and the facts. You can not possibly conceive of the volume of business 
transacted in this bureau from day to day, and what the effect of such dis- 
orderly work would be, and how the singling out in that way of a publication 
here and there, in one or another class, and dealing with it alone of its class, 
would bring down upon us such a protest against its unfairness that the pub- 
lic condemnation of our work would soon put a stop to it. We can hope to 
succeed in this reform work only while we are considerate of the morals and 
equities of the situation, and are careful to be not only within the law, but to 
be following a course which will appeal to the public as fair. 

You no doubt have the power to direct any course of procedure ; but you never 
before indicated that you desired such a radical change in the policy which has 
all along characterized the work of this bureau in dealing with this problem. 
If the second class were not literally infested with abuses as it is, and there 
existed only one here and there, we should, of course, take them up as we found 
them and deal with them regardless of the class in which the abuse was found. 
But these practices are of long years standing, and the publishers, by reason 
of noninterference on the part of the department, are justified in believing that 
they are not abuses at all; and the department has declared, and has followed 
all along, the practice of giving notice of changes of rules concerning the appli- 
cation of the law under the reform. The only way that we can successfully 
handle this work at all is by dealing with publications in classes, working 
through one at a time, taking the more flagrant class first, and the more 
flagrant abuse in that class first, as nearly as we can locate them. You do 
not seem to appreciate that this reform work is a revolution and not an orderly 
procedure of administering a law from the beginning. The department itself 
is not clean. 

You say, it is not proper in deciding this case that I should take into view 
the question of expediency or policy. If that be true I must have entirely mis- 
conceived the purport of the Bromwell-Weinschenk letter and the whole policy 
of the reform work so far as it has been conducted since 1901. In dealing with 
the cases as they come up in the course of business, I do base my decisions upon 
the law and the evidence before me. 

You say that it is not important whether the investigation was instituted 
upon my motion or at the instance of the Postmaster General or some other 
officer of the Post Office Department. My answer is that I am entirely sub- 
servient to the Postmaster General, and if he had directed me to take up this 
case and decide it upon the law and the facts by itself, irrespective of the policy 
and practice, I should have done so. The question before me was one of excess 
mailings, and I have not yet reported upon the question of whether the publica- 
tion as a whole is lawfully enjoying the second-class mailing privilege. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. Ill 

What I meant in my report was that the Investigation, as conducted in this 
particular case, was the reverse of the practice of this bureau in dealing with 
such cases, and that I had to make the hest of the situation when it came to 
me, applying, as far as I could, rules which prevail in this bureau. That is in 
accordance with what I understood your verbal instructions to be. You said, 
" lean backwards." I understood that to mean to lean backwards in the 
endeavor to be fair. I did not understand it to mean to lean backwards to be 
unfair, as would have been true had I not dealt with the case under exactly 
the rules which I have applied in deciding the question of excess mailings. 

You say that my instructions were to take this case up for consideration, 
examine all the evidence available, and to base my decision solely upon the 
law and the evidence. I received no such instructions. I hope you will reread 
your letter of April 14, 1906, herein quoted. (See p. 30.) In addition to that 
letter the only instructions given the matter concerning the treatment of the 
case were, as I have already stated, to " lean backwards." 

I can not understand why the case was turned over to me at all, as it was 
by your letter of April 14, 1906, if it was not for the purpose of giving it treat- 
ment in accordance with the rules in daily practice in the bureau of the 
Third Assistant Postmaster General, so far as they might be applied. The 
case had long been handled independently of the Third Assistant Postmaster 
General and why might it not have been completed without him? Your memo- 
randum indicates that you are satisfied that the publication is an abuse and 
that there have been excess mailings. You have the power to decide for your- 
self, as you have the power to overrule my decision upon a review of all the 
evidence relevant and material. I did not conceive of the case being turned 
over to me to proceed other than in the ordinary way under the practices of 
this bureau as far as they could be applied. The unusual course followed 
prior to the case being turned over to the Third Assistant Postmaster General 
made it necessary, in order for me to determine the issue as drawn, to appoint 
a commission to examine every individual subscription order and all the other 
evidence affecting the subscriptions. 

If we were at work correcting the abuses in the class of periodicals to which 
the Woman's Magazine belongs we would take up first the more flagrant cases, 
but we would not undertake to handle any case as the Woman's Magazine has 
been handled. We are not equipped for it. I have explained this in citing 
the treatment of this bureau in the case of the Journal of Agriculture, pub- 
lished by this same publisher. (See p. 77.) 

I spoke of the raking scrutiny given this publisher's business by this bureau, 
because never before had such an investigation been undertaken. Ordinarily 
we require a publisher to prove his right ; we do not undertake to prove that 
he has not the right, as we did in this case. In dealing with this case in this 
reverse way it was necessary to keep a force of from 65 to 70 persons for up- 
wards of three months scrutinizing every scrap of paper which furnished any 
evidence upon the question of the subscription list. It is believed that not many 
publications could survive in a business way such an ordeal. 

You say " why is not your investigation in this case, which you say on page 
^.8 of your report is unusual in that so far as known never have any publisher's 
business methods been subjected to such a raking scrutiny " properly the be- 
ginning of such scrutiny of such periodicals. My answer to that extraordinary 
proposition is that such a course of procedure is impossible on its face. In 
this one case the conditions as to the subscription list might change to the 
extent of hundreds of thousands of copies before we completed an investigation 
concerning a given mailing. While this bureau was dealing with this case 
nearly all of its best equipped men were absent from the department three 
months a'nd a half. The current business on this subject from day to day, 
together with that arising in connection with the commission's work in St. Louis, 
was all and even more than could be handled to say nothing of taking up any 
new cases for investigation. What might happen in the entire field while we 
were concentrating all of our energies on one case, may be left to conjecture. 
To make any sort of progress at all under such methods as were pursued in the 
Woman's Magazine case we should require a thousand additional employees 
available all the time in the field, as well as an addition to the departmental 
force, to deal adequately with the matters arising from day to day in con- 
nection with such investigations. We should not have taken up this case as 
we did but for the manner in which the issue had been drawn at the time the 
case was transferred to me. I have explained this before. 



112 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

I state here again that I have not yet reported whether the Woman's Maga- 
zine is or is not an abuse of the second-class privilege. I have decided only 
that there were no excess mailings during the period covered by the investiga- 
tion according to the usual rules and practices. I have, too, already stated 
that in the course of administration we sometimes require a publisher to correct 
practices which are improper in themselves, while the broader question of 
whether the publication itself as a whole is or is not an abuse may not be 
taken up for decision until some time after because of its not being reached in 
the usual course of treating publications by classes. 

The following is quoted from your memorandum, beginning on page 29| : 

" On page 19 of your report you state : 

" ' If the postmaster conceived the Woman's Magazine to be an abuse, in 
whole or in part, of the second-class privilege, it was his duty to report his 
reasons for so believing to the Third Assistant Postmaster General and await 
instructions. It was wrong for him to proceed on his own motion and accord- 
ing to his own methods and judgment.' 

" This is precisely what the postmaster did, as shown by his letters to you 
of November 11, 1905, and March 15 and April 2, 1906, which should be on file 
in your office, with copies of your replies thereto. His action in collecting 
postage was not taken until April 6, subsequent to the date of his communica- 
tions to you, and in taking that action he was simply obeying the postal laws 
and regulations and the orders from your bureau, and he would have been dere- 
lict if he had not done so. If ' it was wrong for him to proceed on his own 
motion and according to his own methods and judgment ' in these matters, then 
the regulations with which he complied should be rescinded. 

" You state that whether this publisher be good or bad has nothing to do 
with the question of rate of postage on his periodicals. This is true, but have 
you given due consideration to the bearing the department's repeated experi- 
ences with him must have on his important and material statements? You 
have practically accepted as true those statements in so far as they pertain to 
the methods of treatment of expirations, as against the statements of the post- 
master and his 50 clerks, the inspectors, and of reputable employees and ex- 
employees of the publisher, who state exactly the contrary. And are not these 
statements of the publisher discredited by your findings, as exhibited by your 
report? Especially should his statements be carefully investigated when he 
states, as he does in a letter dated March 14. 1905, that ' the paid-in-advance 
subscriptions to the Woman's Magazine is 1,250,000,' as against your finding 
of approximately 565,300 ; and that ' the paid-in-advance subscription to the 
Woman's Farm Journal is in advance of 500,000,' as against your finding of 
approximately 182,150. 

" Applying the rule announced by you in your Circular XXV you have re- 
jected subscriptions for the Woman's Magazine to the number of 24,115 for the 
reason that such subscriptions were secured by so-called ' clubbing ' arrange- 
ments with other publications, which you hold to be objectionable. Your objec- 
tion is that such subscriptions were paid for at less than the advertised price; 
so much less, indeed, as to make the subscription rate merely nominal. But, 
while rejecting these subscriptions and declaring them to be illegitimate, you 
propose to direct the postmaster to return to the publisher the money collected 
upon copies sent in pursuance of such subscriptions, as well as copies sent as 
samples upon that basis from October, 1905, to the present time — approximately 
$7,716.80. If these subscriptions are illegitimate, then how can you hold that 
copies of the publication which have been sent heretofore to such subscribers 
and sample copies in equal number are entitled to transmission at the pound 
rate of postage? " 

You quote from page 19 of my report concerning what I said was the post- 
master's duty, and you say he did act accordingly. In the previous part ot 
this letter I have shown that all correspondence from the postmaster on this 
subject between the date of the Rromwell-Weinschenk letter, July 19, 1905, and 
April 14, 1906, was referred to you with the repeated requests that if you de- 
sired me to act on any of the postmaster's communications, you would so direct. 

You mentioned to me verbally a day or so ago that the postmaster's com- 
munications referred to you were returned to me with directions. If so, none 
of those directions ever reached me. On March 22, 1906, you instructed me to 
advise the postmaster as to a rate of postage in response to his letter of March 
]5, 1906, but that was not in any sense directing me to act in any other matters 
pf administration, Your letter of April 14, 1906, itself merely placed upon me 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 113 

the duty of determining whether there had been excess mailings and whether 
the publications were entitled to second-class entry- It conveyed no instruc- 
tions to me to take up other questions of administration or to instruct or deal 
with the postmaster. 

On the contrary, your instructions of March 22, 190G, indicated that I was to 
assume, in Instructing the postmaster as to the rate of postage on alleged excess 
mailings that his findings as to such excess copies were correct. I was not in- 
structed to take charge of the case. The postmaster's letter of April 2 to which 
you refer was merely a request for an interpretation of my letter of March 30, 
and my reply to that was submitted to you. All this is shown previously in 
this correspondence. 

The letter of November 11, 1905, to which you refer, was not returned to this 
office and no instructions concerning it were given; that is to say, I received 
no instructions. 

You say that the postmaster's action in collecting postage was not taken 
until April 6, 1906, subsequent to the date of his communication to me, and that 
in taking that action he was simply obeying the Postal Laws and Regulations 
and the orders from my bureau. In the two letters found on pages 21 and 23 
hereof I instructed him merely as to the rate of postage upon copies which he 
had determined by his own methods and in his own way to be in excess. I 
repeat what I said in my report, that it was wrong for the postmaster to pro- 
ceed on his own motion and according to his own methods and judgment, if, 
as a matter of fact, he did so. Prior to the date of this letter and subsequent 
to the date of the Bromwell-Weinschenk letter (July 19, 1905) I have given 
the postmaster at St. Louis no specific instructions as to how he should conduct 
inquiries concerning the mailings of these publications at his office in order to 
determine whether or not excess copies were mailed, or whether or not the 
publication was an abuse of the second-class privilege. He has all along pro- 
ceeded on his own motion or under instructions of some other officer. There is 
no law or regulation requiring the postmaster to proceed as he did, and no post- 
master ever before has done as he has done in this case. He did not proceed in 
accordance with the regulations, for there is no regulation requiring him to 
perform such functions as he undertook to perform. He practically took admin- 
istration into his own hands, unless he was directed to do as he did by some 
officer superior to him. 

I did not, as you assume, accept as true the statements of the publisher as 
against the statements of the postmaster, his 50 clerks, the inspectors, and the 
ex-employees of the publisher as to expirations. I found the facts. His state- 
ment was taken only as to the length of time he was carrying expirations for the 
purpose of making calculations. But that was not a material question in the 
ultimate decision. If he could carry expired subscriptions at all, he had the 
right to carry them for some period ; and whether at one time he carried them a 
month and at another time six months or even a year was wholly immaterial to 
the question whether at the time of the mailings in dispute he was mailing 
excess copies. The decision was on the question of numbers, and whether the 
publisher told the truth as to the time carried is wholly immaterial, because had 
he said that he was carrying them a year instead of six months our calculations 
would have been made on that basis because of the lack of any rule of limita- 
tion. So far as I know there has been no statement by any of the officers or 
clerks or inspectors disputing the fact that during the period covered by the 
investigation — that is, from October, 1905, to May, 1906 — the publisher was regu- 
larly carrying expirations as a part of the mailing of each issue. Their state- 
ments related to the conditions which existed at the time and prior to the 
investigation made by the inspectors in October, 1905. As previously stated, 
the fact that the publisher may have been mailing copies prior to October, 1905, 
to persons who were not subscribers could have no bearing upon my decision 
upon the question of excess mailings subsequent thereto, so long as the total 
mailings of none of the issues which I investigated exceeded twice the number 
of subscriptions, current and expired, which the publisher had for those issues. 

I did not give consideration to the experiences of the department with the 
publisher, or the statement of the postmaster or his 50 clerks, the inspectors, 
or of the reputable employees and ex-employees of the publisher. That had 
nothing to do with the case. The case before me was one simply of numbers — 
was there or was there not an excess mailing according to the established prac- 
tices and rules? I found the facts. I did not, as you seem to think, take any 
statement of the publisher as true. 

86534°— 11 8 



114 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

It made no difference to me what the publisher stated in his letter of March 
14 concerning the paid-in-advance subscriptions. Again, I say I found the facts, 
and I did not take into consideration any statement of the publisher or of any 
other person in making my decision on the facts. 

The 24,115 subscriptions rejected in my report in the case of the Woman's 
Magazine was because it appeared that the publication was either given to those 
alleged subscribers as a premium for purchasing merchandise or in a clubbing 
arrangement where the price of the magazine was reduced to the subscriber 
or where it appeared to be given away or thrown in as a premium for sub- 
scribing to some other periodical. That is a definite rule in Circular XXV 
and it was applied; but that had nothing to do with the question of excess 
mailings except that, if without that number of subscribers to justify the total 
mailings as to subscribers there would be insufficient subscribers to justify 
the total mailings, including sample copies, there would then be an excess. 
But we could not so rule without giving the publisher an opportunity to cut 
off those alleged subscribers. That has always been done in such cases. 
Especially would that rule apply in this case, since, so far as we know where 
this publication was sold to subscribers at less than the advertised price, it 
was without the knowledge of the publisher and was unauthorized by him. 

I did not, as you assume, declare those subscriptions illegitimate. The law 
does not require "legitimate" subscribers, and we can not read that require- 
ment into the statute. The law requires " a legitimate list," and the rulings 
I made concerning 24,115 subscriptions were that they were not entitled to be 
mailed as to subscribers because of the rule in Circular XXV, which was 
applied. 

The whole question as to whether excess copies were mailed depended upon 
whether the publisher was entitled to carry expired subscriptions. Without 
them he would have mailed excess copies; with them he did not. This pub- 
lisher had as much right as any other publisher to carry expired subscriptions, 
and we have no rule of limitation which we could have applied to such a 
situation as we found in his case merely to determine that there were excess 
copies mailed. We would, however, be justified in holding that a list of sub- 
scribers so largely made up of expired subscriptions, especially for such a cheap 
publication, and their being carried for such a length of time, vitiated the whole 
list, and that, therefore, there was not for the publication a " legitimate list of 
subscribers," as required by law. 

To enable us to hold that there were excess mailings it would have been 
necessary to say either that the publisher was not entitled to carry expirations 
as subscriptions at all, or that he was limited in the number he might carry and 
the time for which he might carry them. We can not say that he has any less 
rights than any other publisher, and all, or at least most of them, carry expired 
subscriptions. In this situation, therefore, there could be no justification for 
stepping in and saying that the expirations were too many or too long carried, 
and that therefore there was an excess mailing. That would have been to make 
a rule for this case alone, and under court review it could not stand. The only 
way that we can deal with the expired subscriptions at all, as to limiting the 
number and the time carried, is to declare, as in the rule in Circular XXV, that 
where the proportion is too great, as compared with the whole list, that it 
vitiates the list as a whole, and therefore the publication has not a legitimate 
list as required. On this ground the publication might be excluded altogether 
from the second class. On such an action no court would interfere. 

The reason I hold that we can not collect more than the pound rate on copies 
already sent in fulfillment of the 24,115 alleged subscriptions to which I took 
exception, and on sample copies to an equal number, is because there is no evi- 
dence whatever that it was the design, or with tbe knowledge of the publisher, 
that the Woman's Magazine should go to those alleged subscribers at less than 
the advertised price. We discovered that first. The treatment given this case 
is in accord with the general policy of dealing with the subject. 

THE WOMAN'S FARM JOURNAL. 

The following is quoted from your memorandum beginning on page 30 : 
" It appears from your report that you regard the situations of the Woman's 
Magazine and the Woman's Farm Journal as quite similar, and that you based 
your action in both cases upon practically the same reasons. The general queries 
put to you in reference to the former publication are therefore to be taken as ap- 
plying similarly to the latter. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 115 

"Yon state that the question in this (Farm Journal) case 'depends upon the 
decision to be made as to expiration subscriptions. If allowed, he is within 
his privilege; if disallowed, he has exceeded his privilege.' It appears that 
the question does not depend upon the matter of expired subscriptions alone 
for the reason that copies of the October (1905) issue of this publication 
included in manila wrappers were not mailed as going to persons whose sub- 
scriptions had expired, as claimed by the publisher. The publisher mailed 
in October copies of the October issue about equal in number to his legitimate 
subscription list of which 367,605 were in white wrappers, as is testified to 
by inspectors, the postmaster, and employees and ex-employees of the publisher. 
He mailed 144.930 copies of that issue in manila wrappers, and 38,255 copies 
in blue wrappers. The total number of copies mailed in the three kinds of 
wrappers (white, manila, and blue) were 350,790, all of which were treated 
as going to current subscribers. The 38,255 copies in blue wrappers were 
mailed as going to persons whose subscriptions had expired, to whom it had 
been the custom to send three copies a year in blue wrappers. The publisher 
first claimed to the inspectors and the postmaster that 144,930 copies mailed 
in manila wrappers as going to subscribers were on account of expired sub- 
scriptions; and you have substantially taken his figures as correct by conceding, 
on page 26 of your report, that he has the privilege of mailing on account of 
expired subscriptions a number approximately equal to that stated by him, 
to wit. 145.991. However, in a subsequent letter, dated November 20, 1905, 
the publisher admits that 140,000 of the 145,000 copies which he was permitted 
to mail on account of expired subscriptions for October, 1905, were mailed to 
persons other than subscribers, whose names were selected by the publisher 
himself, and which were paid for out of a special fund that had been subscribed 
by his friends and sympathizers. 

" This practice of using names other than those of persons whose subscrip- 
tions had expired is testified to by Mr. Eylerman, one of the present employees 
of the publisher, who states that prior to the inspectors' count in October, 
1905, the ' lot numbers.' or ' sample copy names,' were used to pad the subscrip- 
tion list, and that this practice had been in operation since early in the year 
1903: that the list of each publication was in this manner padded to the 
extent of about 125.000 every month. 

" It will be noticed here that on page 26 of your report the Woman's Farm 
Journal is shown to have had 153,597 current subscriptions for October, 1905, 
and to have mailed free 448,962 copies. Is not 448,962 copies a ' considerable 
proportion,' within the meaning of those terms as used in the case of Conant v. 
the Postmaster General ; and if so, why should action not be taken in accord- 
ance with that decision? 

11 This information and all the other material evidence herein given, bearing 
on the alleged misstatements, etc., of this publisher, are said to have been given 
your commission in full by the postmaster and the inspectors during their in- 
vestigation at St. Louis. Under what construction of the law and regulations 
should the postmaster be instructed to return money collected for transient 
second-class postage on copies of the publication which were not even sent to 
persons who had been subscribers and whose terms had expired, but were sent 
to parties who had never subscribed but whose subscriptions are claimed to 
have been paid for by others, which claim, however, the publisher has never 
substantiated within the knowledge of the postmaster or the inspectors? This 
question is pertinent for the reason that on December 19, 1906, when the post- 
master at St. Louis submitted to you the question whether subscriptions to the 
Woman's National Daily, which had been paid for in large numbers by agents, 
were legitimate, you answered, under date of December 22, that ' Persons are 
not subscribers to Woman's National Daily whose subscriptions are not paid 
for by themselves but by other persons competing in a subscription-gathering 
contest' If this rule is applicable to the Woman's National Daily, why is it 
not applicable to the Woman's Farm Journal and the Woman's Magazine? 

" You state on page 27 of your report, in referring to the matter of expired 
subscriptions being carried from 14 to 16 months on this publication that, ' as 
stated before, we have no definite ruling as to the proportion or length of time 
expired subscriptions may be carried, and we are here in the same embarrass- 
ing situation in making a ruling. If this case stood alone, there would be no. 
doubt as to the proper decision to make.' You further state that you consider 
1 the carrying of such a volume of expired subscriptions and for such a length 
of time, especially in such a low-priced publication, as a grave abuse,' 



116 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

"The mere fact that this case does not stand alone in your judgment must 
not influence your determination upon the question before you. If the circum- 
stances are such as in your view constitute a grave abuse, and there is author- 
ity under the law to put an end to that abuse, your report should so state. 

" Comparing the number of expired subscriptions to the Woman's Farm 
Journal, treated by you as continuing subscriptions, with the number of such 
subscriptions to the Woman's Magazine treated in like manner, why was the 
proportion of expired subscriptions to current subscriptions conceded only to 
the extent of 34 per cent in the case of the Woman's Magazine, while the far 
greater proportion of 74 per cent was allowed in the case of the Woman's Farm 
Journal? Are we not forced to the conclusion that the publisher began the 
use of subscriptions which had expired over three months previously for the 
purpose of maintaining his mailings as to subscribers at the number claimed 
prior to the October count by the postmaster and the inspectors ; and that he is 
claiming just such number each month as is necessary to meet the needs of 
each publication, in avoiding payment of transient second-class postage? 

" On page 26 of this memorandum it was pointed out that a total of 285,881 
copies of the Woman's Magazine was claimed by the publisher to have 
been paid for and mailed from a special fund of $10,000 provided 
by his friends and sympathizers. A total of 427,580 copies of the 
Woman's Farm Journal is also claimed by the publisher to have been mailed 
and paid for out of the same fund, at the price of one-half cent a copy. The 
same inquiry is made in respect of such copies of the Woman's Farm Journal 
as was made concerning those of the Woman's Magazine. Why should not 
postage at the transient rate have been collected on all these copies? 

" Your statement that there were 145,991 expired subscriptions in October, 
1905, of the Woman's Farm Journal is met with results of tests made by the 
postmaster and information given by the publisher that seem to clearly disprove 
the mailing of any such number of copies that month to persons whose subscrip- 
tions had expired. There were 350,720 copies of that issue mailed as to actual 
subscribers. The postmaster at St. Louis sent 1,000 inquiries to postmasters 
at offices to which such copies were mailed, to ascertain whether the persons 
receiving them had ever subscribed for the publication. It was developed that 
45 per cent of such persons were current subscribers, that 2.75 had been sub- 
scribers but their subscriptions had expired, and that 52.25 per cent had never 
subscribed, thus showing clearly that, had the 144,930 copies mailed as going 
to subscribers in manila wrappers been addressed to those whose subscriptions 
had expired, as originally claimed by the publisher, and as is now stated by 
you, the percentage of expired subscriptions would have been 40 per cent instead 
of 2.75 per cent. A second test based upon the 145,991 copies mailed in manila 
wrappers, which the publisher claimed to have been sent to persons whose sub- 
scriptions had expired, showed that 90 per cent of such persons had never sub- 
scribed. Like tests, made by the postmaster for November, December, January, 
February, March, and April following show that during the November mailing, 
which was after the count, the publisher grasped the expiration idea, and his 
mailings of copies that month to persons whose subscriptions had expired 
increased from 2.75 to 30 per cent, and maintained practically that 
ratio thereafter, and that his mailings to nonsubscribers decreased from 52.25 
per cent in October to 9 per cent in November; clearly indicating his change in 
policy after the count. In addition to this, the inspectors submitted to the pub- 
lisher about November 15, 1905, names of 500 of the persons to whom 344,000 
copies of the October issue had been mailed in manila wrappers, and which the 
publish or claimed were going to persons whose subscriptions had expired. The 
inspectors called upon the publisher to submit the card records of such former 
subscriptions. He was able to furnish the inspectors but six cards out of Ihe 
500. He was called to the post office subsequently, and when shown ihe result 
of the tests and asked for a further statement, he admitted that the 144,000 
copies sent out in manila wrappers during October were not copies sent to per- 
sons whose subscriptions had expired, as originally claimed by him, and as you 
now contend, but were sent to parties whose names were selected by him, and 
were paid for out of the special fund subscribed by others. This statement he 
reduces to writing in a letter on November 20, 1905, giving the number of copies 
alleged to have been mailed and paid for out of this special fund for the preced- 
ing months, a copy of which letter is before me. Inasmuch as the tests made 
showed that the persons to whom the publisher claimed to have sent these copies 
had never subscribed therefor, and as the publisher subsequently admitted that 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 117 

they were not former subscribers, why do yon in your report accept his original 
statement ns true and credit him with 145,991 copies as having been mailed In 
October, 1905, to persons whose subscriptions had expired? In this eornection, 
it may be stated that all of the above information was given to Mr. Fettis, of 
your commission, by the inspectors, and should have reached you. If it did, 
upon what basis do you rule that the postmaster should return the postage 
collected on such illegitimate mailings? 

11 1 wish you to reconsider this case in the light of the inquiries and sug- 
gestions contained in this memorandum. You are not to determine whether it 
is politic or impolitic to rule upon this matter either the one way or the other. 
Your duty is merely to examine all the evidence before you and from whatever 
source derived, and determine whether under the law the action of the post- 
master at St. Louis was proper and should be sustained, or was improper in 
whole or in part and should be reversed. You may have reason to believe that 
there are other publishers whose methods and practices are as bad as or worse 
than those of this publisher, but that fact certainly has no bearing upon the 
action which your duty demands you to take as to those features of the case 
which should be considered without regard to the class to which it belongs. 

" It seems to me that in giving credence to the claims of the publisher you 
have entirely lost sight of the findings of the postmaster at St. Louis and the 
post-office inspectors. Certainly the investigations made and reports submitted 
by those officers are entitled to at least equal weight with the claims of a pub- 
lisher who is under investigation. It should be remembered also that the 
original investigation by these officers was made at a time when the methods 
of the publisher were more nearly normal and when he was not contemplating 
investigation by the Post Office Department. It was calculated to put the pub- 
lisher upon his guard, and it is possible that when your subsequent inquiry was 
made, however thorough and conscientious it may have been, he had adopted 
measures which effectively concealed past practices. Indeed, subsequent in- 
quiries by the postmaster and inspectors seem to have developed this to have 
been true. 

'• This is a case in which, among other things, the revenues of the Govern- 
ment are involved to the extent of $80,000 between April, 1906, and the present 
date and calls for the most careful action. The interests of the Government 
as well as the publisher should be thoroughly safeguarded, and no evidence in 
the possession of the department which will tend either directly or indirectly 
to throw light on the case should be ignored. 

" I desire nothing but a just and impartial report and will sustain you in 
making such a report; but I do not feel that, in the absence of a further state- 
ment from you in response to the questions raised in this memorandum, I 
would be warranted in approving your action." 

The circumstances in this case are, as you say, practically the same as in the 
case of the Woman's Magazine, and all the queries concerning that case apply 
substantially to this. The same may be said of the answers. 

I found in this case that the expirations were in greater proportion to the 
whole list and that they were carried for a longer period than in the case of the 
Woman's Magazine, but I was confronted with the same awkward situation as 
in the other case. There was no rule of limitation in existence, and we could 
not justly or legally invent one for this case alone. We had promised, and lived 
up to our promise always heretofore, that in making new rules they would be 
published and opportunity given publishers to meet the new requirements. 
Therefore, as bad as this case appeared to be, I could render no different deci- 
sion on the question of excess mailings. The question decided in this case was 
entirely oi>e of excess mailings. I have not yet reported on the question whether 
the publication as a whole is an abuse of the second-class privilege, or whether 
the list of subscribers is a legitimate list as a whole. 

In this case, as in the other, you appear to attach some importance to the 
color of the wrappers in which the copies were mailed. So far as my decision 
is concerned, that is wholly immaterial. As in the former case, it is a question 
of numbers — a comparison of totals. If the list of current subscriptions, plus 
those carried as expirations, was not less than half the total mailings, there 
was no excess; but the list might be judged to be not legitimate as a whole, 
and the whole publication be rejected from the second-class on account of the 
volume of expired subscriptions. That, however, is not the question I decided. 
Whether there were excess mailings depends, as I said, upon whether we 
allowed the expirations to be carried or not, and there was no rule under which 



118 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

we could interfere with their carriage except in passing judgment on the list as 
a whole. 

In this case, as in the other, nothing whatever that the publisher said or did, 
or any other person said or did, was given any weight. I went to the heart of 
the matter and secured the facts from the tangible written orders of the sub- 
scribers themselves. Neither did I give any weight or consideration to what 
was being done prior to the time covered by my own investigation. That was 
not before me. It is not a question of what the publisher had been doing be- 
fore, but what he was doing at the time. 

Again, the question of a " considerable portion " to which you refer has to do 
with the whole list, and not with the question of excess mailings. 

Concerning the so-called material evidence to which you refer bearing on the 
alleged misstatements, etc., of this publisher, I have already explained that 
they were given no consideration whatever. I decided upon the facts as I 
found them and no statement of the publisher or any other person, can change 
the facts if they be the true facts. 

You ask under what construction of law and regulation can the postmaster 
be instructed to return money collected at the transient second-class rate on 
copies of the publication which were not even sent to persons who had been 
subscribers and whose terms had expired. I do not know what the publisher 
may or may not have substantiated to the postmaster or inspectors. The rul- 
ing I made in this case is in exact accordance with the practice. The rulings 
charging more than the pound rate on any copies mailed by a publisher are 
merely arbitrary, and under the provisions of section 448, Postal Laws and 
Regulations, are of doubtful legality in view of the fact that the statute itself 
gives the publisher the pound rate upon all copies mailed by him except when 
they are addressed for local delivery as provided in section 452, Postal Laws 
and Regulations. 

The arbitrary rulings referred to are simply to meet the situations as they 
arise from time to time. They become necessary to maintain the construction 
that a publisher is privileged to mail at the pound rate only copies sent as to 
subscribers, and as sample copies. In all my annual reports I have endeavored 
to show the insufficiencies of the present law in relation to the second-class 
mail matter, and where any case was resisted by a publisher and likely to come 
to court review, I have avoided making any of those arbitrary rulings which 
would charge a rate of postage on any copies other than as provided in the 
statute for such copies when mailed by the publisher. I did apply the rule 
in this case that I applied in the Woman's National Daily case. I do not 
understand how you construe my statement to the contrary. It is the stock 
journal case over again. 

You say, concerDing the views I expressed as to expired subscriptions in the 
Woman's Farm Journal case, that the mere fact that this case does not stand 
alone should not influence my judgment, but if I had acted on that principle 
I should consider myself very unjust and unworthy of holding office administer- 
ing on behalf of the Government a law enacted for the benefit of its citizens 
and presumably for all alike. Under the act of 1879, which applies to this case, 
it does not make any difference who the publisher may be, or what his business 
methods in these or other particulars may be, or whether he has incurred our 
displeasure in some particular; those matters are wholly immaterial to and 
apart from the question of postage rates upon his periodical. That is a ques- 
tion by itself, according to my view, and should be decided according to uni- 
form rules applicable to all citizens alike, whether they be good or bad, or 
truthful or otherwise, in our estimation. If false evidence be submitted by 
any person in order to secure second-class rates wrongfully, the statute provides 
proper punishment. 

In this case, as in the other, you seem to confuse the question of whether 
the publication as a whole is an abuse and the question of whether the carry- 
ing of expired subscriptions standing by itself is an abuse. I treated them as 
two separate questions and I have not yet reported as to whether the publica- 
tion as a whole is an abuse. 

You ask why the proportion of expired subscriptions in one case was allowed 
to be greater than in another. I have repeatedly stated that for the purpose of 
determining whether or not there was an excess mailing, the proportion of 
expired subscriptions, be it great or small, and the length of time carried by 
it long or short, could not be used in determining whether the publisher had 
exceeded his privilege so as to charge the transient rate on excess copies. We 
might have ruled him out of the second class altogether because his list was 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 119 

not legitimate, being made up too largely of expired subscriptions, but we could 
not fix a limit without due notice and an opportunity to publishers to conform. 
Whether the publisher is carrying expired subscriptions from month to month, 
just enough to meet his needs as to circulation, was not a question before me; 
it was wholly immaterial. It would be material as to judging whether the 
publication as a whole was an abuse. 

The reason why we could not, in good morals, collect the transient second- 
class rate on the copies claimed to have been paid for by the special fund of 
$10,000 to which you refer is because we had suspended, in Circular XXV, the 
rule which so provided for just such cases, namely, the stock journal suspen- 
sion. It is the same question and same principle. 

Concerning the 145,991 expired subscriptions in October, 1905, of the Woman's 
Farm Journal, I repeat that I found the facts, and no information was sought 
from the postmaster or from any other person. They possess no information 
which could disprove what I found. My investigation was thorough, complete 
in every detail, and went to the heart of the matter. I gave no thought or 
attention to the tests being made by the postmaster as to whether copies were 
being sent to subscribers. I was deciding an appeal from him and I did not 
take his word or his findings, or the word or findings of the publisher, or any 
other person's word or findings ; I got the facts from the subscribers' orders 
themselves, and they are indisputable. 

You say that you wish me to consider this case in the light of the inquiries 
and suggestions contained in this memorandum. By that I understand that 
you mean that I should go over the case again and give weight and considera- 
tion to such matters as the color of the wrappers, to the publisher's statements, 
the postmaster's statements and the inspectors' statements, etc. I shall do this 
if you so direct, but you gave me a question of appeal to decide and I took the 
statements or the findings of no person. I found the facts for myself. I found 
what in the last analysis is the only true evidence upon which to decide any 
case. I did not regard the color of the wrapper as real evidence. I did not 
regard any statement of the publisher or postmaster or the inspectors as hav- 
ing weight against the facts as I found them; and I found, after a discovery 
of all the facts material and essential to a correct decision, that the post- 
master was wrong and should not be sustained in his claim that there were 
excess copies mailed. 

I do not, as you seem to think, give credence to the claims of the publisher 
nor did I lose sight of the findings of the postmaster or the post-office inspectors, 
but I was deciding an appeal from them, and I took into account only the evi- 
dence which was conclusive. The whole case lies in the tables as shown in the 
report. They show the true facts. 

I repeat, in answer to your question, that what the publisher had done in the 
past was immaterial. 

To carry expired subscriptions is not unlawful. No publisher can be denied 
the right. If he overdoes it, our remedy is to exclude the publication alto- 
gether. That is what the rule in Circular XXV means. It does not help on a 
question of excess mailings. 

The amount of revenue involved is wholly immaterial to the case which I 
decided. I decided it according to the rules which I have explained, and it 
would be the same whether there was $1 or $100,000 at stake. 

I have no pride in being sustained in the decision which I made. You may 
feel that I have not drawn correct conclusions from the facts and circumstances 
of the case, but I did exactly as I felt bound to do as a public officer performing 
a quasi judicial function in a way to maintain the reputation of the Government 
for honest and fair dealing with its citizens on a plane of equality, irrespective 
of any views I might have concerning the person who in the capacity of pub- 
lisher was mailing the publication, and I did what I thought was exactly your 
instructions to do, namely, decide the case according to uniform rules and prac- 
tices of this bureau and upon the facts ascertained beyond any question of 
doubt. 

In the October, 1905, issue of the Woman's Farm Journal there was a condi- 
tion unsatisfactory and difficult of solution. One hundred and forty thousand 
copies were mailed apparently to persons whose names and addresses had been 
selected by the publisher from the lists held by him, and the copies were alleged 
to be paid for from the so-called special fund. The publisher states that on 
that issue, due to a mistake growing out of the absence of one of his employees 
in charge of the matter, an equal number of copies were not sent to actual sub- 
scribers. This is not a good explanation, but it is all we could get, and whether the 



120 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

copies were sent in place of copies to actual subscribers or to persons alleged to 
be subscribers when their subscriptions were paid for by third parties or in 
place of expired subscriptions the result was the same. 

If we could establish that the publisher was not mailing expired subscriptions 
regularly prior to that time, and merely resurrected them for the purpose of 
justifying bis total mailings, it would be a matter to be dealt with by itself, 
but could only be dealt with after the exact facts were ascertained. 

Whatever may have been the conditions with reference to the October mail- 
ing, if the publisher subsequently discontinued the practice of sending copies to 
persons who were claimed to be subscribers and paid for out of the so-called 
special fund, and during the period covered by the investigation did mail copies 
to persons whose subscriptions had expired for from one month to 16 or 18 
months, as the case may be, those conditions could have no weight in determin- 
ing whether there were excess mailings beginning with the April, 1906, issue. 

Neither the publisher's explanation nor the evidence and statements of the 
postmaster and the inspectors determine anything as to whether there were 
excess mailings of the October, 1905, issue. I found no rule in force applicable 
to the case on which we could decide that there was an excess mailing. The 
host evidence we could obtain was that reported as shown by the table on page 
26 giving the current and expired subscriptions. The records so far back as 
they were available were not sufficient to enable the commission to do more 
than make estimates of the probable number of expired subscriptions for that 
mailing. Whether they were used or not there is no positive proof. Either 
they were not used, and the 140,000 copies paid for by others were sent in their 
place, or the 140,000 copies paid were sent in the place of that many regular sub- 
scriptions dropped for that issue, or they took the place of sample copies ; and 
in no event is there any rule which if we were able to get the exact facts beyond 
dispute by which we could determine by reason of their being mailed that they 
themselves were excess copies, or that other copies were mailed in excess. 

For illustration, the report shows that for the October, 1905, issue 602,559 
copies were mailed. In order to establish that there were no excess copies 
mailed within the ruling it would have to be shown that 301,000 approximately 
were sent to subscribers. These might have been made up of current sub- 
scribers' copies, expired subscribers' copies, or copies paid for from the special 
fund. This publisher is as much entitled to claim pea-sons as subscribers whose 
subscriptions are paid for by third parties as the publishers of stock journals 
are, and to count a sample copy against each such subscription as the publishers 
of stock journals are privileged to do. Therefore the technical difference as 
to whether the 140,000 copies paid for from the special fund were sent as to 
subscribers, or in the place of expired subscriptions, or in the place of current 
subscriptions accidentally dropped, has no effect upon the ultimate decision. 
There is nothing in the circumstance at all which would enable us to say that 
because of it there was an excess mailing. 

From a statement of tests of mailings of the various issues of the Woman's 
Farm Journal, which was submitted to this office by the postmaster under 
date of December 19, 1906, it appears that from the issues of November, 1905, 
to April, 1906, inclusive, counting as subscribers those current and expired, the 
percentage of replies in favor of the publisher is in no case less than 80 and in 
some cases above 90. In this connection it is proper to state that the practice 
of this bureau has all along been to regard the whole list as legitimate when 
not less than 80 per cent of the replies received on a test are favorable to the 
publisher. In the experience of making tests of subscription lists it is practi- 
cally never found that a list is free from defect, but it is always a question of 
degree. Whether in this case the proportion of expired subscriptions to the 
whole number of subscriptions is sufficient to vitiate the list as a whole has not 
yet been reported upon. 

If it is believed that the evidence in the possession of the postmaster and the 
inspectors will establish their claims as to excess mailings of the October, 1905, 
issue, I know of no better way to determine the issue than to bring the case to 
trial and let the court decide, for I have no basis which would justify me in 
making a decision different from the one I have rendered. 

The tables on the following pages (159 and 160) with reference to the num- 
ber of subscriptions, current and expired, on the Woman's Farm Journal list, 
and the total mailings of the issues covered by the investigation are self- 
explanatory. 



BELIEF OP THE LEWIS PUBLISHING COMPANY. 



121 



Table showing the number of subscriptions &n the dates indicated, including 
expirations carried for from 1 to 16 months, and the total number of copies 
mailable at the pound rate, based thereon, for the issues of the months ending 
on the respective dates. 



Dates. 



Subscriptions. 



Current. 



Expira- 
tions. 



Total. 



Equal 
number 
samples. 



Total 

copies 

mailable, 

pound 

rate. 



Oct. 31, 1905. 
Nov. 30, 1905 
Dec. 31, 1905. 
Jan. 31, 1906. 
Feb. 28, 1906. 
Mar. 31, 1906. 
Apr. 30, 1906. 



153,597 
165,134 
190,014 
189,763 
191,676 
187,911 
197,006 



145, 991 
145,690 
136,017 
134,979 
138,464 
144,462 
137,862 



299,588 
310, 824 
326,031 
324, 742 
330,140 
332,373 
334,868 



299, 588 
310,824 
326,031 
324,742 
330.140 
332,373 
334,868 



599,176 
621,648 
652,062 
649,484 
660,280 
664,746 
669,736 



Table shewing the number of copies mailed at the pound rate of the issues 
indicated, estimated from the postmaster' 's record of iveights. 





Copies. 


Issues. 


Subscrib- 
ers. 


Samples. 


Total. 


October, 1905 


346, 445 
321,261 
370, 359 
346, 830 
358, 623 
328, 378 
348, 191 


256, 114 
274, 489 
230, 454 
245, 508 
231,336 
258,304 
242, 875 


602, 559 
595, 750 




December, 1905 


600, 813 


January, 1906 


592, 338 


February, 1906 


589, 959 


March, 1906 


586,682 


April, 1906 


591,066 





Table showing the number of copies the publisher was entitled to mail of the 
issues indicated, the estimated number mailed, and the difference betivecn the 
two totals in each case. 



Issues. 



Number of copies. 



Entitled 
to mail. 



Actually 
mailed! 



tional 

copies 

mailable. 



Excess. 



October, 1905... 
November, 1905 
December, 1905. 
January, 1906.. 
February, 1906. 
March, 1906.... 
April, 1906 



599,176 
621,648 
652,062 
649,484 
660, 280 
664,746 
669,736 



602,559 
595,750 
600,813 
592,338 
589,959 
586,682 
591,066 



25,898 
51,249 
57, 146 
70,321 
78,064 
78, 670 



3,383 



The foregoing table shows an excess mailing of 3,383 copies of the Woman's 
Farm Journal in October, 1905. I stated on page 32 of my report (hat it was 
deemed best to take no notice of that excess because our figures were only 
estimates which might be thousands of copies out of the way, due to variation 
in the weight per copy, and if the estimates of expirations were based on 18 
instead of 16 months' credit there would be no excess. 

I think it well before closing to invite your attention to the fact that the 
postmaster's calculations were found to not be altogether reliable. His report 
in the letter dated April 23, 190G (see p. 40 of this communication), is seriously 
defective, as shown by the commission's report (pp. 27, 28). The postmaster 
erred to the extent of over 700,000 copies in his estimate of the number of 
subscribers' copies mailed with the November, 1905, issue of the Woman's 



122 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

Magazine over the number mailed with the October, 1905, issue, as shown 
by the record of weights in the St. Louis post office. He also erred to the 
extent of 300,000 copies in his estimate of a decrease in the number of sample 
copies mailed with the November issue from the number mailed with the 
October issue. 

In connection with the foregoing statement, your attention is invited to page 
62 of this communication, from which it appears that the figures for the 
November mailings in the postmaster's report to you do not agree with those 
in his report to this office. 

I have decided this case on the evidence submitted to me which, in my humble 
opinion, threw light upon the issue which I was directed to decide. I could 
not take for granted the findings of the postmaster, controverted by the pub- 
lisher who appealed from his decision ; I could not take as uncontroverted 
ex parte statements which may have formed the basis for the postmaster's 
decision. On the other hand, I could not take as conclusive any statement of 
the publisher which was in conflict with the findings of the postmaster. I 
therefore proceeded to get at the real facts by the most careful method I was 
able to conceive. In deciding the question I considered, as I said before, every 
fact which to my mind controlled or affected the determination of the question 
of excess mailings. If I have failed to consider any evidence which is relevant 
and decisive as to the issue, whether favorable to the Government or to the 
publisher, I should deem it my duty to reconsider the case in the light of such 
evidence when it is pointed out to me. So far as your letter is concerned, I 
failed, as I think I have shown by this communication, to discover that any 
such evidence exists. If you, sitting on appeal from me, find, in the exercise 
of your own judgment, that any such piece of evidence was omitted, I will, of 
course, following your direction, consider that piece of evidence; but in con- 
sidering it I can only give it the weight which its own force and power entitles 
it to in my judgment. If in my judgment it neither controls the case nor 
affects the result of all the other evidence, I shall be compelled to arrive at 
the conclusion at which I have already arrived. I have already stated reasons 
why I do not think any matter brought up in your communication is con- 
trolling, or relevant to this issue; but if you hold that any such evidence is 
relevant, and will point it out and direct it to be considered, I will give it the 
best consideration that my mind enables me to give it, and that is all that 
I can do. Of course, if your mind draws a different conclusion than mine 
from the evidence which I have considered, I assume that you, in the exercise 
of your jurisdiction as Postmaster General, will decide the case yourself in 
accordance with your own views. 

The great volume of papers in this case, and the great hurry in which this 
communication has been prepared, leads me to say that some essential ex- 
planation or statement of fact might have been omitted. I find now, at the last 
moment, that perhaps the paper would have been more complete if I had placed 
in it a copy of my memorandum addressed to you under date of October 14, 
1905, which shows the situation at that time, and a copy of your letter of No- 
vember 6, 1905, to Mr. E. G. Lewis, president of the Lewis Publishing Co., in 
which you expressed yourself as to the policy of the department. 

The postmaster's and the inspectors' case seems to rest in the last analysis 
upon the theory that expired subscriptions may not legally be counted. In this 
proposition, knowing the universal practice of publishers and the rules of the 
department, it is impossible for me to concur. I recommend that all the evi- 
dence, material and relevant, which has been collected be submitted at the trial 
of Mr. Lewis. My decision is not evidence of anything. The facts found and 
reported by the commission, and any facts relevant and material which can be 
submitted by the postmaster and the inspectors will no doubt be accepted as 
evidence by the court, which will draw its own conclusions irrespective of any 
decision I have made. I should consider it wholly unnecessary that the criminal 
proceedings against Mr. Lewis should be suspended or delayed on account of, or 
in any manner made to be dependent upon, any decision of mine. 

The reports of the commission on the two publications, the Woman's Maga- 
zine and the Woman's Farm Journal, and all the exhibits connected there- 
with and necessary for a complete understanding of the case, are at your com- 
mand. 

I have the honor to be, sir, very respectfully, 

Edwin C. Madden, 
Third Assistant Postmaster General. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 123 

POSTMASTER GENERAL'S LETTER OF MARCH 4, 1907, REPLYING TO THIRD 
ASSISTANT POSTMASTER GENERAL'S LETTER OF MARCH 2. 

Office of the Postmaster General, 

Washington, D. C, March 4, J 901. 

Sir: The memorandum submitted by you in the evening of March 2, in 
reply to the inquiries and criticisms made in my memorandum to you of 
February 13 in the matter of your findings upon the question whether mailings 
of the Woman's Magazine and the Woman's Farm Journal, of St. Louis, Mo., 
between October, 1905, and May, 1906, were in excess of the number which the 
publishing company was entitled to mail as to subscribers and as sample 
copies, at the rate of 1 cent a pound, is before me. This communication 
consists of 15S typewritten pages, and by reason of its great length and of 
its submission less than two days before the date fixed, and well known to 
you, for my retirement from the office of Postmaster General, it is impossible 
for me to comment upon it in detail at this time. Inconsistencies, evasions, and 
statements flatly contradictory of each other run through the whole length of 
the communication, and the explanations and excuses offered in support of 
the position which you have taken are so flimsy and so lacking in every element 
of common sense and reason that it is amazing that an officer of your experience 
and assumed expert knowledge of the subject to which the communication 
relates would be willing to take responsibility for preparing and submitting it 
to his official superior. You have obscured the situation by including in this 
voluminous communication a vast amount of irrelevant comment and numerous 
misleading and untrue statements. Your object seems to be to place the 
Postmaster General in a false position, and to throw back upon him the re- 
sponsibility and discredit which attach to your inexcusable mismanagement of 
this whole matter. 

On page 49 of your memorandum you say that " the Woman's Magazine 
and the Woman's Farm Journal have never been regarded as positive abuses, 
and certainly not ' specially flagrant ' ones." This may be your judgment as 
to the character of these publications and the methods by which they are cir- 
culated, but it certainly is not the judgment of the Postmaster General or of 
the majority of the officers of the Post-Office Department, who have had most 
intimately to do with this investigation. You have said heretofore that the 
business of no publisher has ever been subjected to such raking scrutiny as 
has that of the Lewis Publishing Co. in respect of these two publications. 
You are not in position, then, to say with authority that there are other pub- 
lishers who are more flagrantly abusing the second-class privilege than is the 
Lewis Publishing Co., and your statement that such is true is mere assumption 
and represents one of the methods by which you would appear to excuse the 
position you have taken in respect to the publications named. 

You say, on page 29, that on April 14, 1906, I sent you instructions which 
for the first time placed this matter in your charge. The memorandum quoted 
below completely refutes this statement : 

[Memorandum for the Third Assistant Postmaster General. Case Woman's Magazine 
(C. D. No. 26">75) and Woman's Farm Journal (C. D. No. 58208), published at St. 
Louis, Mo., by the Lewis Publishing Co.] 

July 12, 1905. 
Please have investigation made along the usual lines pursued by your 
bureau to determine whether the Woman's Magazine and the Woman's Farm 
Journal are entitled to transmission at second-class rates. It is desired that 
you will have this investigation completed as promptly as may be consistent 
with your general practice, and will bring the results to my attention. 

Until such investigation shall have been completed it does not appear 
necessary to give the postmaster at St. Louis the instruction which you sug- 
gest in memorandum of the Sth instant, as continuance of the present practice 
will accomplish the same result. 

Geo. B. Cortelyoit, 
Postmaster General. 

You explain tbat in conducting the inquiry into the publication methods of 
the Lewis Publishing Co. in respect of the Woman's Magazine and the Woman's 
Farm Journal unusual methods have been used. If this be so, then the re- 
sponsibility for those unusual methods rests upon you. for, in the memorandum 



124 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

just quoted, you are directed to " have investigation made along the usual lines 
pursued by your bureau," and that it be " completed as promptly as may be 
consistent with your general practice." There was no reason whatever why 
you should not have proceeded with this matter strictly in accordance with 
your usual methods and practices from and after July 12, 1905, nor is there 
any reason why the whole matter should not have been decided months ago. 
You have sought every possible excuse for postponing action. Repeatedly you 
have promised that the decision would be rendered at a certain time, but when 
that time arrived have declared that it was impossible to submit it until a 
certain subsequent time. Only by the utmost pressure upon you was I able to 
obtain your decision upon the question of excess mailings on the date of 
February 7. My memorandum, which was quite exhaustive, went to you on 
the evening of February 13, and you have consumed 17 days in replying to 
that memorandum. Your reply would not yet have been made had I not 
peremptorily demanded it and insisted absolutely upon having it not later than 
the evening of March 2. But for that insistence it would not have been 
received until after my retirement from this office. 

On page 55 of your memorandum you say : 

"Had the postmaster reported, as provided in paragraph 6, section 456, P. L. 
& R., that the publisher was mailing sample copies in excess of 100 per cent 
of his subscription list, or more copies than he was entitled to mail at the 
pound rate, or had the postmaster reported that he was holding excess copies, 
our action, if the case were being handled in the bureau of the Third Assistant 
Postmaster General, would have been to require the publisher, if he disputed 
the postmaster, to establish the legitimacy of his list of subscribers and the 
extent thereof, in order that we might determine whether he was mailing excess 
copies. Failing to prove his right to mail at the pound rate the number pre- 
sented, we would require him to pay the transient rate on the excess, or on 
his refusing to do that and sustaining his right to the pound rate as pro- 
vided in the act of March 3, 1885, we should then proceed in an orderly way 
to take up and determine the right of the publication to second-class rates 
at all." 

As a n:. tter of fact, the postmaster did report precisely what you say he 
should have reported, and it was your duty under the instructions conveyed 
in my memorandum of July 12, 1905, to take up this matter in regular and 
orderly fashion and deal with it " along the usual lines pursued in your bureau," 
and determine whether both the publications were entitled to transmission 
at second-class rates. More than 18 months have expired since that direction 
was given to you, and you have not yet decided the matter thus placed in your 
hands. Neither have you taken up the two matters in the order directed 
by my letter of April 14, 1906, which, indeed, was mainly a repetition of the 
direction given on July 12, 1905. In the latter communication it was said : 

" You will please immediately institute an investigation for the purpose of 
determining whether the Woman's Farm Journal and The Woman's Magazine, 
issued by the Lewis Publishing Co., are entitled to second-class privileges, 
and if so, what number of copies of each publication should be admitted to 
the mails monthly at the rate of 1 cent per pound. This investigation should 
be thorough and comprehensive, and in pursuance of it the company should 
be afforded early opportunity to be fully heard upon the questions involved." 

You have taken up these two questions in the inverse order, deciding that 
there have been no excess mailings by the company, but leaving undetermined 
the question whether the two publications are entitled to second-class privi- 
leges. No reason is given for this change in the mode of procedure directed by 
my letter; and you knew that at this late date I could not wait for your 
finding upon the question of the second-class privilege. You have discarded 
declarations of the president of the company made against his interest, the 
sworn statements of its employees and ex-employees, and evidence carefully 
and painstakingly gathered by honorable and experienced officers of the Post 
Office Department, acting under their official oaths, all of which would have 
been received as competent evidence in any court in the land. You state 
repeatedly that you have done this; that you went "to the heart" of the 
matter, and " found the facts." You assume to have found the facts, and it 
was your duty to find them, but it is palpable that you have not done so. 

Your claim that you have been kept " entirely in the dark as to what was 
being done, save for the correspondence which was " coming to you and 
being transferred by you to the Postmaster General, is not in accordance with 
the facts, and can not be accepted as made in good faith. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 125 

To the accuracy of your statements on page 65, that "the question was 
whether or not the total number of copies mailed exceeded the total number 
of copies which the publisher was entitled to mail, including his sample-copy 
privilege," and that "there can be no excess mailings by a publisher so as 
to subject him to the transient rate unless the total of his mailings of the 
issue in question exceeds the combined total of samples and subscribers, giving 
him the benefit of one sample for every subscription," I take exception for 
reasons which were stated in my memorandum of February 13. 

Your argument, beginning on page 77, in support of your contention that 
the subscription price of these publications is so low that the company could 
not be justly required to maintain an adequate system of records and accounts, 
will not stand the most superficial examination. You say there is no law 
requiring the publisher to keep such a system, or any system, and follow that 
statement with the declaration that the burden of proof is upon the company 
to show that its subscription lists are legitimate. Unquestionably the burden 
does rest upon a publisher to show that his subscription lists are legitimate, 
and if his records and accounts do not afford such proof, then he is not to 
be excused for failing to keep an adequate and proper system ; but you propose 
to free the Lewis Publishing Co., nevertheless, from blame for failure to keep 
proper and intelligible records. 

You say that what the postmaster at St. Louis did in pursuance of his 
inquiries as to alleged excess mailings by the Lewis Publishing Co., what 
the post-office inspectors found in the course of their investigations, what 
has been sworn to by employees and ex-employees of the company, what decla- 
rations have been made by the president of the company against its interests, 
what its published, and presumably established, rules were as to expired 
subscriptions, and, in fact, every other matter except the count of subscription 
letters made by your commission and the actual receipts of the postmaster 
showing weights of mailings, have received no attention or consideration from 
you whatever. That an officer acting in a quasi judicial character, as you 
assume to be acting, should put out of view such material and important 
evidence and testimony is incomprehensible. 

On page 122 of your memorandum you refer to the practice of certain stock 
journals, copies of which are mailed as going to subscribers, which copies, 
in fact, are ordered and paid for in large quantities by persons desiring to 
circulate them for reasons of their own, and which are mailed by the publisher 
to persons designated by such purchasers, without orders from the parties 
addressed. You say it would be no objection to the enforcement of the regu- 
lation which forbids the counting of such alleged subscriptions as any part of 
the legitimate list of subscribers to say that other publications indulging 
in the same practice had not yet been dealt with, " because obviously all pub- 
lications could not be dealt with as of one date. All that could reasonably 
be asked is that the department should be proceeding with due diligence so 
to deal with them." There is a clear distinction to be drawn between the 
practices of these stock journals and those of the Lewis Publishing Co. in that 
the alleged subscriptions for the former publications were ascertained to be 
ordered and paid for by others, while in the case of The Woman's Magazine 
and the Woman's Farm Journal large numbers of copies of the publications 
were going as if to subscribers which were not paid for at all. In respect of 
the stock journals in question, however, you have from me, under date of 
February 12, 1907, a letter reading as follows : 

" Sir : Upon the statement by you last summer, that your duties in connection 
with the preparation of the data for the Postal Commission, and the fact that 
such a commission had been authorized by Congress, would make it impracti- 
cable foi v you to take up and consider as in the usual course certain cases in- 
volving alleged abuses of the second-class mailing privilege, I approved of a post- 
ponement of action in such cases until the commission had made its report. In- 
cluded among the cases of which the consideration was thus postponed were 
those involving certain stock journals passing in the mails as second-class pub- 
lications and which, in your opinion, were probably abusing seriously the privi- 
lege accorded to them. 

"As the report of the Postal Commission has now been made and submitted to 
Congress, it is my desire that all cases involving alleged abuses of the second- 
class mailing privilege be taken up by your office as promptly as possible and 
considered, and that there be no hesitancy about excluding from the mails as 
second-class matter all such publications as are found to be abusing that privi- 
lege in such manner as to violate the law, and to subject the Post Office Depart- 



126 RELIEF OP THE LEWIS PUBLISHING COMPANY. 

ment to losses of revenue. Each of these cases should be dealt with upon the 
ascertained facts, and without reference to any other consideration than whether 
the methods and practices pursued are not violative of law and there is not rest- 
ing upon the Post Office Department the duty of excluding the publication from 
the second class of mail matter. 

" Respectfully, yours, " Geo. B. Cortelyotj, 

" Postmaster General." 

You seem to feel that you are forbidden to deal with ascertained irregularities 
and illegal practices upon the part of the Lewis Publishing Co. because other 
publishers indulging in like practices have not been, so far, molested. I have 
no knowledge of any other case in which the second-class privilege is being so 
grossly abused as the Lewis Publishing Co. is shown to be abusing it. If you 
know of such cases and have not used your authority to put an end to them, 
then you have failed in your duty. If during your incumbency of the office of 
the Third Assistant Postmaster General, covering a period of eight years, you 
have been aware of the existence of such conditions, and have allowed them to 
continue, then the point of your reiterated remark that " the department is not 
clean " is easy to understand. But if the cases of the Woman's Magazine and 
the Woman's Farm Journal are merely representative of a class, as you declare, 
why is it not fair, in correcting the abuses prevalent in such class, to begin with 
these publications? You admit that all cases belonging to a class can not be 
disposed of " as of one date," and that "all that could reasonably be asked is 
that the department should be proceeding with due diligence so to deal with 
them," and yet you have refrained for 18 months from taking any definite action 
against the Woman's Magazine or the Woman's Farm Journal purely for the 
reason that they are members of a class, and that many of that class have not yet 
been taken up. You declare your belief that these publications are violating 
the spirit of the law and the established regulations, and yet you are not even 
willing to require that they pay postage upon mailings which are clearly in 
excess of the legally authorized number. 

Your claim on page 130 that this matter " had long been handled inde- 
pendently of the Third Assistant Postmaster General " is not true, for the whole 
matter was placed in your hands definitely and positively by my memorandum 
of July 12, 1905, of which my letter of April 14, 1906, was little more than 
repetition. 

On pages 138 and 139 you say : 

" The whole question as to whether excess copies were mailed depended 
upon whether the publisher was entitled to carry expired subscriptions. With- 
out them he would have mailed excess copies; with them he did not. This 
publisher had as much right as any other publisher to carry expired subscrip- 
tions ; yet we have no rule or limitation which we could hav« applied to such a 
situation as that found in his case, merely to determine that 'there were excess 
copies mailed. We would, however, be justified in holding that a list of sub- 
scribers so largely made up of expired subscriptions, especially for such a 
cheap publication, and their being carried for such a length of time, vitiated the 
whole list, and that therefore there was not for the publication a ' legitimate 
list of subscribers,' as required by law." 

You seem here positively to decide that neither of these publications is en- 
titled to exercise the second-class mailing privilege, because an essential 
requisite of such a publication is that it have a " legitimate list of subscribers." 
1 am quite unable to see how you can consistently so hold and yet take the 
position unqualifiedly that the action of the postmaster at St. Louis in collect- 
ing postage upon copies going to subscribers who are not legitimate, and upon 
sample copies based upon them, should be reversed. Neither am I able to grasp 
the finespun distinction which you make between a " legitimate list of subscrib- 
ers " and a list composed of legitimate subscribers. You have declared by regu- 
lation that the list must be " legitimate in its entirety," and if that requirement 
means anything, it means that all the subscriptions embraced in the list shall 
be legitimate. A legitimate list of illegitimate subscribers is inconceivable 
and a palpable absurdity. Not only do subscriptions which are not legitimate 
vitiate the list of a publisher, but there is clearly no right in law to send 
copies of a publication in pursuance of such subscriptions at the pound rate. 
To accord the privilege to the publisher of sending such copies at the transient 
second-class rate is a distinct concession, and if there be any question at all 
as to this matter it can be only whether the third-class rate should not be de- 
manded upon such copies rather than the transient second-class rate. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 127 

Of course you know that in all the dealings of the Post Office Department 
with the Lewis Publishing: Co. my altitude has been that absolute impartiality 
should he shown and that the company should be treated with all fairness 
and in strict accordance with justice and right. Your insinuation, therefore, 
that any question of personal feeling towards the company or its officers by 
reason of criticisms made upon the Post Office Department, or for any other 
cause, has been permitted to enter into my consideration of this matter is 
absolutely without any warrant or excuse whatever. 

You refer to an error in the report of the postmaster at St. Louis of April 23, 
1906. The records show that he notified you of the correction of said error on 
August 31, 1906. which was long before you began the preparation of your 
decision of February 7, 1907. in the matter of excess mailings. You make no 
mention of said error in that report, and this indicates quite clearly that you 
had received and used the corrected figures and that the error had not entered 
into your consideration of the case. 

I am not able in the brief time remaining before my retirement from this 
office to comment in further detail upon the matters set forth in your memo- 
randum by way of excuse or explanation of your action. I shall, however, 
give them further attention later, .and see that the results of such attention are 
embodied in the official records of the Post Office Department. 

Since the preparation of the foregoing you have increased the number of 
pages in your memorandum by eight, and have renumbered them accordingly. 

Your memorandum of October 14, 1905, to me, and my letter of November 6, 
1905. to Mr. E. G. Lewis, to both of which you now refer on page 163, do not 
require comment at this time. 

Very respectfully, Geo. P>. Corteltotj. 

Postmaster General, 

Hon. E. C. Madden, 

Third Assistant Postmaster General. 



POSTMASTER GENERAL'S LETTERS OF MARCH 4, 1907, DENYING THE SECOND- 
CLASS 'MAIL PRIVILEGE TO THE WOMAN 's MAGAZINE AND REVOKING 
THE CERTIFICATE OF AUTHORIZATION TO THE WOMAN'S FARM JOURNAL. 

March 4, 1907. 

Sir: In the case of the appeal of the publisher of the Woman's Magazine from 
your recommendation and action in the matter of demanding and collecting post- 
age at the transient second-class rate on all copies of said publication mailed 
monthly in excess of its legitimate subscribers, which, as shown by the extended 
investigations of the department and the count of October 13, 1905, aggregated 
539,901, and in excess of a like number properly marked and sent as sample 
copies, you are informed that upon the hearing granted the publisher on April 
30 and May 1, 1906, and a careful and thorough investigation by the department 
your recommendations are approved and your action sustained. 

You will therefore remit to the department, in canceled stamps attached to 
sheets of paper, the excess postage that has been collected by you, and also make 
demand on the publisher for the balance due the Government under the law 
and the regulations of the department at the transient second-class rate of 
postage upon all excess copies of the publication mailed on and after October 1, 
1905. 

In the matter of your recommendation that the department deny the pending 
application, submitted August 22, 1902, for entry of this publication as second- 
class matter, you are informed that upon a hearing granted the publisher on 
the same dates (April 30 and May 1, 1906), and upon a careful and thorough 
investigation of all of the evidence by the department, I find that the publication 
does not have a legitimate list of subscribers; that it is designed and published 
primarily for advertising purposes; and that it is being circulated at a nominal 
rate contrary to the law and the regulations of the department. 

You will therefore refuse hereafter to accept for mailing at the second-class 
rate of postage copies of the said publication and inform the publisher that his 
application for entry of the Woman's .Magazine as second-class matter is denied. 
Very respectfully, 

Geo. B. Cortelyou, Postmaster General. 

The Postmaster, St. Louis, Mo. 



128 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

March 4, 1907. 

Sib : In the case of the appeal of the publisher of the Woman's Farm Journal 
from your recommendation and action in the matter of demanding and collect- 
ing postage at the transient second-class rate on all copies of said publication 
mailed monthly in excess of its legitimate subscribers, which, as shown by the 
extended investigations of the department and the count of October 13, 1905, 
aggregated 141,328, and in excess of a like number properly marked and sent 
as sample copies, you are informed that upon the hearing granted the publisher 
on April 30 and May 1, 1906, and a careful and thorough investigation by the 
department, your recommendations are approved and your action sustained. 

You will therefore remit to the department in canceled stamps attached to 
sheets of paper, the excess postage that has been collected by you, and also 
make demand on the publisher for the balance due the Government, under the 
law and the regulations of the department, at the transient second-class rate 
of postage, upon all excess copies of the publication mailed on and after October 
1, 1905. 

In the matter of your recommendation that the department revoke the order 
granting second-class mailing privilege to this publication, you are informed 
that upon a hearing granted the publisher on the same dates (April 30 and May. 
1, 1906), and upon a careful and thorough investigation of all of the evidence 
by the department, I find that the publication does not have a legitimate list 
of subscribers ; that it is designed and published primarily for advertising pur- 
poses ; and that it is being circulated at a nominal rate, contrary to the law and 
the regulations of the department. 

You will therefore refuse hereafter to accept for mailing at the second-class 
rate of postage copies of the said publication, and inform the publisher that the 
second-class mailing privilege heretofore extended the Woman's Farm Journal 
is withdrawn, and that the order granting the same is revoked. 
Very respectfully, 

Geo. B. Cortelyou, Postmaster General, 

The Postmaster, St. Louis, Mo. 



AND E. G. LEWIS. 

On July 6, 1905, Postmaster General Cortelyou issued what is 
known as a "fraud order" against the People's United States Bank, 
its officers and agents as such, and E. G. Lewis, at St. Louis, Mo. A 
copy of this order is attached hereto marked " Exhibit A." The 
effect of this action was to prevent the delivery of mail and the pay- 
ment of postal money orders to these parties, and to return all such 
mail and money orders to the senders. In issuing this order the 
Postmaster General acted under the authority vested in him by sec- 
tions 3929 and 4041 of the Revised Statutes, as amended by the act 
of September 19, 1890 (c. 908, sees. 2 and 3, 26 Stats., 466), and by 
the act of March 2, 1895 (c. 191, sec. 4, 28 Stats., 964). These laws 
are as follows : 

AN ACT To amend certain sections of the Revised Statutes relating to lotteries, and 
for other purposes. [Act of Sept. 19, 1890, 26 Stats., 466, 1 Supp. Rev. Stats., 802.] 

Be it enacted by the Senate and House of Representatives of the United Stales 
of America in Congress assembled, * * * 

Sec 2. That section thirty-nine hundred and twenty-nine of the Revised 
Statutes be, and the same is hereby, amended to read as follows : 

" Sec. 3929. The Postmaster General may, upon evidence satisfactory to 
him that any person or company is engaged in conducting any lottery, gift 
enterprise, or scheme for the distribution of money, or of any real or personal 
property, by lot, chance, or drawing of any kind, or that any person or company 
is conducting any other scheme or device for obtaining money or property of 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 129 

any kind through the mails by means of false or fraudulent pretenses, repre- 
sentations, or promises, instruct postmasters at any post office at which regis- 
tered letters arrive directed to any such person or company, or to the agent or 
representative of any such person or company, whether such agent or repre- 
sentative is acting as an individual or as a firm, bank, corporation, or associ- 
ation of any kind, to return all such registered letters to the postmaster at the 
office at which they were originally mailed, with the word ' Fraudulent' plainly 
written or stamped upon the outside thereof, and all such letters so returned to 
such postmasters shall be by them returned to the writers thereof, under such 
regulations as the Postmaster General may prescribe. But nothing contained in 
this section shall be so construed as to authorize any postmaster or other per- 
son to open any letter not addressed to himself. The public advertisement by 
such person or company so conducting such lottery, gift enterprise, scheme, or 
device, that remittances for the same may be made by registered letters to any 
other person, firm, bank, corporation, or association named therein shall be held 
to be prima facie evidence of the existence of said agency by all the parties 
named therein ; but the Postmaster General shall not be precluded from ascer- 
taining the existence of such agency in any other legal way satisfactory to 
himself." 

Sec 3. That section four thousand and forty-one of the Revised Statutes be, 
and the same is hereby, amended to read as follows : 

" Sec 4041. The Postmaster-General may, upon evidence satisfactory to him 
that any person or company is engaged in conducting any lottery, gift enter- 
prise, or scheme for the distribution of money, or of any real or personal 
property by lot, chance, or drawing of any kind, or that any person or company 
is conducting any other scheme for obtaining money or property of any kind 
through the mails by means of false or fraudulent pretenses, representations, or 
promises, forbid the payment by any postmaster to said person or company of 
any postal money orders drawn to his or its order, or in his or its favor, or to 
the agent of any such person or company, whether such agent is acting as an 
individual or as a firm, bank, corporation, or association of any kind, and may 
provide by regulation for the return to the remitters of the sums named in 
such money orders. But this shall not authorize any person to open any letter 
not addressed to himself. The public advertisement by such person or company 
so conducting .any such lottery, gift enterprise, scheme or device, that remit- 
tances for the same may be made by means of postal money orders to any other 
person, firm, bank, corporation, or association named therein shall be held to be 
prima facie evidence of the existence of said agency by all the parties named 
therein; but the Postmaster General shall not be precluded from ascertaining 
the existence of such agency in any other legal way." 

AN ACT For the suppression of the lottery traffic through national and interstate com- 
merce and the Postal Service, subject to the jurisdiction and laws of the United States. 
[Act of Mar. 2, 1895, 28 Stats., 963; 2 Supp. Rev. Stats., 436.] 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled, * * * 

Sec 4. That the powers conferred upon the Postmaster General by the 
statute of eighteen hundred and ninety, chapter nine hundred and eight, section 
two, are hereby extended and made applicable to all letters or other matter sent 
by mail. 

Previous to the issuance of this order a hearing Avas given to the 
bank and Mr. Lewis by the Assistant Attorney General for the Post 
Office Department. Mr. Lewis appeared personally, and was accom- 
panied by Frank J. Cabot and H. L. Kramer, and was represented 
by counsel in the persons of George H. Shields and Shepard Barclay, 
of St. Louis. Mr. Lewis and his counsel were heard at length as to 
why a fraud order should not be issued in the case. Upon the con- 
clusion of the hearing the Assistant Attorney General reported in 
writing to the Postmaster General the facts of the case, together with 
his recommendation that a fraud order be issued. This report set 
forth a complete statement of the case, and the fraud order was issued 
for the reasons therein stated. This report is as follows: 

86534°— 11 9 



130 RELIEF OF THE LEWIS PUBLISHING COMPANY. 



memorandum. 

June 26, 1905. 

In re People's United States Bank, its officer and agents as such, and E. G. 

Lewis, St. Louis, Mo. 

These parties were duly cited to show cause why a fraud order should not 
issue against them, the citation being delivered by the postmaster at St. Louis, 
May 31, 1905. June 16 was set as the date for hearing. On that and the follow- 
ing day full hearing in the case was had before me. Geo. H. Shields and 
Shepard Barclay, attorneys, E. G. Lewis, Frank J. Cabot, and H. L. Kramer 
were present to represent the bank and Mr. Lewis. Assistant Attorney E. W. 
Lawrence and Inspectors Fulton, Sullivan, and Stice were also present. 

About February, 1904, E. G. Lewis, through the columns of the Woman's 
Magazine, which is owned by the Lewis Publishing Co., which company Mr. 
Lewis practically controls, began promoting the sale of stock of a bank which 
he proposed to organize. He has continued to promote the sale of stock in that 
bank through the columns of the Woman's Magazine, a monthly publication, 
and by means of various letters and circulars. He is still promoting the sale 
©f stock of the bank, and large sums of money are daily being received therefor. 

The following exhibits, which are attached to this memorandum, will be 
referred to hereafter : 

Exhibit A, Woman's Magazine for February, 1904 ; Exhibit B, Woman's Maga- 
zine for March, 1904; Exhibit C, Woman's Magazine for April, 1904; Exhibit 
D, Woman's Magazine for May, 1904 ; Exhibit E, Woman's Magazine for June, 
1904 ; Exhibit F, Woman's Magazine for July, 1904 ; Exhibit G, Woman's Maga- 
zine for August, 1904; Exhibit H, Woman's Magazine for September, 1904; 
Exhibit I, Woman's Magazine for October, 1904; Exhibit J, Woman's Magazine 
for November, 1904; Exhibit K, Woman's Magazine for December, 1904; Ex- 
hibit L, Woman's Magazine for January, 1905; Exhibit M, Woman's Magazine 
for February, 1905 ; Exhibit N, Woman's Magazine for March, 1905 ; Exhibit O, 
Woman's Magazine for April, 1905; Exhibit P, Woman's Magazine for May, 
1905; Exhibit Q, Woman's Magazine for June, 1905; Exhibit R, circular en- 
titled " Banking by mail ; " Exhibit S, the People's United States Bank Reporter, 
March, 1905; Exhibit T, People's United States Bank Reporter, April, 1905; 
Exhibit U, People's United States Bank Reporter, May, 1905; Exhibit V, cir- 
cular entitled " People's United States Bank ; " Exhibit W, circular entitled 
" Banking by mail, a people's postal bank ; " Exhibit X, circular entitled " The 
savings deposit system; " Exhibit Y, circular entitled, "The last call; " Exhibit 
Z, circular letter sent out from March to September, 1904 ; Exhibit AA, circular 
letter sent out from May to December, 1904; Exhibit BB, circular letter sent 
out from October to December, 1904, Exhibits CC, DD, EE, and FF, circular 
letters; Exhibit GG, official statement of financial condition of bank, May 29, 
1905; Exhibit HH, detailed statement as to some items of the official statement. 

I do not deem it necessary to discuss in detail all the representations which 
were made in these exhibits, but will take up only such as are material to the 
inquiry of whether or not false and fraudulent representations, pretenses or 
promises have been made. 

It is unquestionable that the mails have been extensively used in disseminat- 
ing large quantities of the magazines and circulars above referred to as ex- 
hibits, and in receiving remittances for stock, and that the mails are being 
used to-day for those purposes. The bank which Mr. Lewis proposed to organize 
was one to transact its business by use of the mails, and not over the counter. 
His plan was to receive savings deposits, carry on a certified check system, and 
do exclusively what might be termed a mail order banking business. For 
present purposes it does not seem necessary to enter into a detailed statement 
about the plans for the bank, with their many ramifications. However, in order 
that there may be no mistake about the representations which Mr. Lewis made 
upon certain points, I shall quote extensively from his magazines, letters, and 
circulars. 

Mr. Lewis represented that he would subscribe to the capital stock a dollar 
for every dollar subscribed by all others ; so that he would own half of the capi- 
tal stock. He also represented that he had pledged his entire fortune — every 
dollar he had and his publishing business — in this banking enterprise, and 
would subscribe at least $1,000,000. 



RELIEF OP THE LEWIS PUBLISHING COMPANY. 131 

Representations to this effect are quoted below : 

" We stand ready to cooperate with you, dollar for dollar, so that you and 
we own this great bank equally." (Exhibit A, p. 24.) 

" I have pledged myself to put up dollar for dollar with you to the utmost 
limits of my private fortune." (Exhibit D, p. 22.) 

" For every dollar that my readers put into this bank as capital I will put 
one dollar myself, to the full extent of my own private fortune. In this way 
I expect to organize a trust company and bank which will become one of the 
most powerful factors in the financial world and which will be owned by my- 
self and readers equally." (Exhibits X and AA.) 

"As for me, I have pledged my entire fortune in it, and many of my associates 
are doing tke same." (Exhibit B, p. 1G.) 

" I am pledging my all to you in this proposition, and I am going further than 
that." etc. (Exhibit E, p. 11.) 

" I am arranging my own affairs so as to turn nearly everything I have into 
cash, outside of my stock holdings in my great publishing business, and I 
expect to subscribe for at least $1,000,000 of the stock of our bank. I must 
pay cash exactly the same as you do. 

" I am pledging my entire personal fortune and my great publishing business, 
dearer to me than my very life. Surely I do not want your dollars for any 
other purpose than to make them double and double for you. * * * My 
investment of practically my entire fortune, outside of my publishing business, 
in our bank stock will not add a penny to my income. 

" Now, I am pledging this publishing business and my income to you in this 
bank. Do you think your $500 would be any temptation to me to do you a 
wrong to get it? Why should I tie up my fortune and the income I already 
have unless I knew the success of our bank was assured beyond question? " 
(Exhibit F, pp. 18 and 19.) 

" I am draining my resources to put a million dollars into our bank myself." 
(Exhibit G, p. 12.) 

" I am staking my own fortune and a business that already earns me over a 
quarter of a million dollars per year and which I have speut the best years of 
my life in building up on my confidence that my readers will treat me fairly 
and honestly in their subscriptions. 

" Back of my offer I have pledged my own fortune and what is now the 
greatest and most Drofi table publishing business in the world." (Exhibit I, 
P. 14.) 

" Now, the enormous subscription to the stock of our bank which I am mak- 
ing myself means some sacrifices. I am selling a very large part of my real 
estate holdings and receive large sums from other interests and put all in the 
stock of our bank, and my investment is made to strengthen yours and to add 
to you profit and prosperity. 

"I am not putting in nearly a million dollars myself, but I am so doing it 
as to add my share of its earnings to the reserve of the bank, thereby doubling 
the value of your stock from year to year. 

" I have pledged my fortune and my publishing business to you in it. (Ex- 
hibit J, pp. 30 and 31.) 

" I have pledged to you in this bank my own fortune and my great publish- 
ing business and the best years of my life. 

" I have held the books open until December 4 by putting up an enormous sum 
in cash myself." (Exhibit K, p. 23.) 

" I have pledged my fortune, my great publishing business, and the best years 
of my life to come, to the success of this bank. * * * 

" By practically pledging everything I have, I have subscribed for $2,000,000 
of the stock of our bank myself in the place of allotting it on the large lists of 
whole wealthy families. * * * 

" Now, the other million dollars of my subscription I have divided into two 
parts of half a million each. One part I shall allot and sell at par to those of 
you who could not subscribe for it and pay for it all at once. * * * 

"I have subscribed for this stock myself and staked about all I have in the 
world to do it, for I must pay for my subscription, dollar for dollar, as anyone 
else does." (Exhibit M, pp. 30 and 31.) 

"As I told you in the February issue, I have personally subscribed for 
$1,000,000 of the capital of our bank, over and above the amount I have sub- 
scribed for myself." (Exhibit N, p. 30.) 

" The other $700,000 of the increase of $2,500,000 was subscribed for by me, 
and out of my subscription I will care for those who have subscribed for full 



132 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

shares and are paying for them in monthly payments or have given notes." 
(Exhibit T, p. 5.) 

" Personally I am severing all connection with any other interests or enter- 
prises than the bank and my publications. Whatever I can turn into cash I am 
investing in the stock of our bank. Even my real estate holdings, which tens of 
thousands of you remember as being in the course of laying out into the most 
beautiful suburb of St. Louis, and which now cover nearly 200 acres of the 
best residence property to be had in St. Louis, with streets, water mains, and 
sewers complete, and on which many beautiful residences have been erected 
since you were guests of ' Camp Lewis ' there during the fair, I have just 
mortgaged and bonded for $750,000, in order to release to me in cash the money 
I had invested in it, and this money I have put into the capital of our bank. 
In addition I have pledged my entire publishing business to the success of what 
I believe will become the leading bank of America." (Exhibit U, p. 3.) 

" I have pledged my property and the best years of my life. * * * Every- 
thing I have I am pledging to the success of this institution, from my great 
publishing business and real estate holdings to my own home." (Exhibit U, 
P. 4.) 

" Nineteen thousand dollars of the stock of a prominent St. Louis bank, turned 
over to this bank by Mr. Lewis towards completing his large subscription to the 
stock of the People's United States Bank, went up some $2,000 in quotation, and 
was sold by the bank at that profit. * * * This mortgage and bond issue 
was made by parties interested largely to release to Mr. Lewis a large sum of 
ready money which he applied in payment of his subscription to the capital 
of the People's United States Bank, and in the assistance of some of the small 
stockholders." (Exhibit U, p. 10.) 

" It is necessary in this organization process for me to subscribe for these 
increases of capital personally and then reallot it to others, owing to the wide- 
spread residences of the many subscribers. In the final adjustment I expect 
to have paid for and hold close to $1,000,000 of the stock, no other person hold- 
ing over $500." (Exhibit U, p. 13.) 

" I have pledged my fortune and my great publishing business to you." 
(Exhibit V, p. 3.) 

" Now my own large holdings, amounting to nearly one-fifth of the total 
capital, are held for the security and profit of the other stockholders." (Ex- 
hibit Y, p. 3.) 

" I am personally investing practically every dollar I have in the stock of 
this bank, and the very life of my great publishing business, now earning over 
a quarter of a million dollars net profit per year, is staked on this proposition, 
for if the bank did not prove the success I predict I would lose the confidence 
of my 2,000,000 readers." (Exhibit R, p. 3.) 

" I have pledged my own personal fortune and my great publishing business, 
earning over a third of a million dollars per year for me in profits, to you in 
this bank." (Exhibit BB, p. 2.) 

" My personal fortune is already pledged in our bank. I have helped as many 
as I could by advancing money to them on their subscriptions, and I am now 
mortgaging my real estate holdings to enable me to pay for additional sub- 
scriptions." (Exhibit CC, p. 2.) 

The evidence shows that Mr. Lewis has not used any of his personal funds, 
or encumbered any of his property, in the promotion or conduct of this bank, 
nor has he subscribed for any of its stock. On the contrary, he has used the 
money of the many subscribers for his own purposes and in promotion of 
enterprises in which he is largely interested. 

The inspectors in their report dated May 12, state : 

" Up to the present time Mr. Lewis has not cooperated to the extent of a 
single dollar of his own money, although the People's United States Bank was 
incorporated November 14, 1904, with $1,000,000 capital stock, half paid up, 
and the capital stock was increased to $2,500,000 on March 15, 1005, with 
$2,000,000 capital paid in (the $1,500,000 increase being full-paid stock), yet 
every dollar paid in for capital stock was paid out of subscriptions for stock 
which Lewis received from patrons" (p. 9). 

" Relative to foregoing, let us state here that on March 18, 1905, two mil- 
lions of the two and a half millions capital stock was paid in out of subscrip- 
tions to the capital stock, and not a single dollar of E. G. Lewis's money had 
gone into the bank, and he told Bank Examiners Cook and Nichols, April 3, 
1905, that he had not paid 1 cent of the capital stock out of his individual 
funds, and that it was a mistake to have issued 915 shares of capital stock 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



133 



in his name, and he took a pen and canceled the certificate for 915 shares in 
their presence, but later in the same day * * * lie claimed that two shares 
of the stock should have been issued to him, otherwise he could not be a 
director or president, and he accordingly issued two shares of capital stock to 
himself. 

" On April S, 1905, in reply to a question propounded by Inspector Sullivan, 
he said to Inspectors Fulton. Stice, and Sullivan that it was a mistake to have 
canceled the certificate for 915 shares of stock made by the bank examiners, 
and then, when asked what had become of the other 9,000 shares of the original 
capital stock. Lewis claimed that he was entitled to 9,915 shares of the capital 
stock, and said he had paid in $495,750 of his own funds of the original 
$500,000 paid in. The truth is that he had not paid a cent, and his charter 
was secured on the false statement that there was paid in by him $495,750, 
when in fact it was paid in by subscribers" (pp. 9 and 10). 

"A careful checking of the subscription books of E. G. Lewis, on April 10 
and 11, 1905, by Inspectors Sullivan and Stice, assisted by Clerks Byler, McBir- 
ney, Fawcett, Miller, Boland, and Eitman, showed that the books show re- 
ceipts of subscriptions to capital stock : 

Up to Nov. 15, 1904 (inclusive) $1,219,218.92 

Up to Dec. 3, 1904 (inclusive) 1,5(50,092.75 

Up to Mar. 14, 1905 (inclusive) 2,111,090.67 

Up to Mar. 15, 1905 (iuclusive) 2,114,920.67 

Up to Mar. 23, 1905 (inclusive) 2,124,539.00 

11 March 23, 1905, was the latest date then entered upon the subscription 
records. Some of the entries on the subscription records were ' canceled,' 
others had a line drawn through them, others were marked ' duplicate,' etc., 
and a careful computation of all these by Clerks Byler and McBirney aggre- 
gated these deductions or credits as $204,993.65, which being deducted left 
$1,919,545.35 as net receipts. 

"* * * On December 3, 1904 (first day bank books were opened), E. G. 
Lewis's special account was then and subsequently entered on bank books as 
follows : 

E. G. Lewis, special account. 



1904. 

Dec. 3. Special account. 

5. Special account. 

6. Special account. 

7. Special account. 
9. Special account. 

13. Special accaunt. 

14. Xo change. 

20. Special account. 

24. Special account. 

31. Special account. 

1905. 

Mar. 13. Special account. 

14. Special account. 

15. Special account. 
10. Special account. 

17. Sppcial account. 

18. Special account. 



$223, 410. 21 
326. 413. 21 

333, 033. 70 

334, 638. 70 
334. 739. 70 
334, 739. 70 

640. 259. 66 

666. 839. 66 
744. 355. 06 



1, 125. 248. 66 
1.129.507.43 
1, 503, 745. 90 
1,503, 826.40 
1,514.4(13.65 
16,831.81 



Demand 
Demand 
Demand 
Demand 
Demand 
Demand 



subscriptions 
subscriptions 
subscriptions 
subscriptions 
subscriptions 
subscriptions 



Demand subscriptions 
Demand subscriptions 
Demand subscriptions 



$14. 425. 00 

28. 464. 00 

29, 499. 00 

29, 701, 00 

30, 596. 00 
32, 146. 00 

42, 001. 50 

42, 001. 50 

43, 766. 50 



Demand subscriptions 46, 074. 50 

Demand subscriptions 46, 074. 50 

Demand subscriptions trans- 
ferred to ' special ac- 
count.' 



It will be observed that on March 15. 1905, this account was increased from 
$1,129,507.43 (for the day previous when we made some investigation of the 



This increase was made up by the items of $46,074.50, 
'demand subscription' account of E. G. Lewis, and 
from the ' collection account ' of E. G. Lewis, and the 
Lewis for $50,000, and the note of E. G. Lewis, E. W. 
A. P. Coakley, and G. A. Arbogast, for $146,375.63 (be- 
ing the note of the president and five directors of the bank), with vouchers for 
the charges and expense of promotion of the bank through the Lewis Publish- 
ing Co. 



bank) to $1,503,715.90. 
transferred from the 
$123,309.44 transferred 
personal note of E. G. 
Thompson, F. J. Cabot, 



134 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 



" The ' collection account ' consisted of such remittances for stock as Lewis 
had actually received from those who subscribed for stock and had paid part of 
one share in cash and had given notes for the remainder of stock subscribed 
for. On March 15, 1905, Lewis had collected in cash from this source 
$128,042.44, but transferred to his 'special account' only $123,309.57, holding 
the remainder still in the ' collection account.' 

" The account of E. G. Lewis, in connection with funds received and dis- 
bursed in this bank transaction, when properly stated for March 15, would read 
as follows: 



RECEIVED. 

Subscriptions for stock- 
I*emand subscriptions _ 
Collection subscriptions. 



$2, 114, 920. 67 

46, 074. 50 

128. 042. 44 



Total__ 2, 289, 043. 61 

Due to balance account. 84, 049. 96 



DISBURSED. 

Paid capital stock $500,000.00 

Paid capital stock 1,500,000.00 

Deductions claimed for 

cancellations, etc 204, 993. 65 

Total 2, 204, 993. 65 



" The item of $204,993.65 is unverified by us, and it is our opinion that this 
amount is overstated. * * * The two items of demand and collection sub- 
scriptions are also unverified and it will be understood that this statement is 
made up from figures furnished by Mr. Lewis. 

" This statement shows that E. G. Lewis has actually paid every cent of the 
$2,000,000 capital stock which has been paid in, out of subscriptions which he 
received, and that not one dollar of his individual money has been used in the 
transaction." (pp. 12, 13, 14, and 15.) 

Mr. Lewis represented to the inspectors that when the charter was granted 
he paid to the bank $495,750 of his personal funds, as subscription to 9,915 
shares. In Mr. Lewis's statement, as sworn to before Inspector Fulton, April 8, 
1905, the following appears: 

" What amount of stock was subscribed for by you in the original corporation, 
and how much was paid on it up to the close of business March 14, 1905? Nine 
thousand nine hundred and fifteen shares were subscribed for by me, and $495,- 
750 paid on it by me. * * * The first certificate was issued to me for 915 
shares, a clerical error, and should have been for 9,915, and on which I paid 
$495,750. When the balance of the original incorporation of $1,000,000 is paid 
up, then certificate No. 1 will be canceled and certificates issued for the full 
amount paid in its place. The pro rata of this would be a certificate for $495,- 
750, being issued to me personally, unless for some reason I had sold part of it 
to some one else. As the subscriptions are paid in, the original capital of one 
million becomes full paid and will be issued full paid. For instance, if $100,000 
came in to-day and was applied on the original incorporation of $1,000,000, one- 
half of which has already been paid, this would enable us to at once issue 
$200,000 of full stock of the original. One hundred thousand dollars of it 
would go to me personally, I having already paid in the first half of the original 
capital. The other $100,000 would go to the other subscribers outside of the 
original incorporators." 

In the memorandum of charges served upon Mr. Lewis, page 6, it is said : 

" It is charged that Lewis, contrary to all his representations, has not in- 
vested any money of his own in the bank. It is charged that his statement that 
upon the granting of the charter he paid into the bank from his personal funds 
the sum of $495,750 is false and that he can not produce any evidence to show the 
contrary. The money which was, in fact, paid the bank, was received by Mr. 
Lewis from people throughout the country as payments for bank stock to be 
issued to them, and none of it belonged to Mr. Lewis." 

At the hearing Mr. Lewis admitted that the $495,750 paid as subscription to 
9,915 shares of stock was money which he had received from people throughout 
the country, and none of it was his personal funds and denied that he ever 
stated the contrary. Mr. Lewis has failed to produce any evidence whatsoever 
that any of his personal funds has gone into this enterprise. Nothing has thus 
far appeared showing any intention on the part of Mr. Lewis to place his per- 
sonal funds in this enterprise, and the evidence shows that his financial condi- 
tion was such that he must have known that it would be impossible to con- 
tribute $1,000,000 or any material part thereof, to the capital stock of this bank. 
By the evidence in this case I am forced to the conclusion that the representa-, 
tions and promises above quoted are false and fraudulent. 



KEL1EF OF THE LEWIS PUBLISHING COMPANY. 135 

Mr. Lewis represented that the board of directors would consist of seven inde- 
pendent, strong, capable men, who would carefully guard the people's money 
from misuse. 

Some of these representations are quoted below: 

" I am selecting seven strong men; men who have fought the battle of life, 
and who have demonstrated their own ability by building up large enterprises 
and business of their own, who have amassed comfortable fortunes of their own, 
and are independent and safe; men who can not be bought, who do not fear to 
stand against any combination and that can be brought to bear on them; men 
who know how and when to say no, and will say it; men who have a life-long 
record of honest dealings and have not lost the milk of human kindness, and 
who will feel their position to be one of a trust greater than any other burden 
or responsibility, and whose thoughts and deeds will be influenced first and 
always by the real welfare of the million depositors; men who have carried out 
successfully their own ambitions, now have their thoughts not on personal gain, 
but have secured a wider view of life and are willing to give the best there is 
in them to the trust imposed; men ripe in business experience, independent in 
fortune, of fair name, and free from the methods or unscrupulousness of ' high 
finance." 7 (Exhibit F. p. IS; Exhibit R, p. 19.) 

" • *. * who can not be influenced or bought in any way. as they have 
no entanglements and have practically retired from active business. These 
men are ' watch dogs ' of the bank, standing between the intrigue and influence 
of the cold-blooded banking business and the people's money, and have the 
power to veto any loam" (Exhibit F, p. 18.) 

" I wish to have associated with me on the board of directors seven of the 
strongest, ablest men that I can get. These men I have selected because 
while they have made independent fortunes they made them legitimately 
and honestly, by a life's labor. They are so situated that they are free from 
the pull and intrigue that their positions would naturally bring against them, 
but have a life record of honesty and fair dealing which makes their standing 
in the community one that can not be questioned." (Exhibit R, p. 11.) 

Mr. Lewis failed to select such a board of directors. 

The importance of these representations about the board of directors which 
Mr. Lewis promises to choose is seen when considered in connection with the 
part of this memorandum following, which treats of the loaning of the capital 
of this bank. The board of directors alone passed upon the loans of the 
bank which were made, and as will be seen hereafter, hundreds of thousands 
of dollars of the capital of the bank were loaned to Mr. Lewis and his enter- 
prises. The board of directors of the bank agreed upon for the first year 
consisted of the following five persons: Edward G. Lewis; Frank J. Cabot, 
editor of Woman's Magazine at a salary of $4,000, and editor of Woman's 
Farm Journal at a salary of $2,000 a year ; Augustine P. Coakley, advertising 
manager of the Lewis Publishing Co. ; Eugene W. Thompson, an employee 
of the Lewis Publishing Co. ; Guy A. Arbogast, an employee of the Lewis 
Publishing Co. In selecting the above board of directors Lewis failed to com- 
ply in any substantial respect with the representations which he had made. 
They were employees of Mr. Lewis and could not reasonably be presumed 
to guard the interests of the stockholders, as Mr. Lewis represented they would, 
if he should see fit to borrow and use the funds. This view is substantiated 
by the facts in the case, for the evidence shows that hundreds of thousands 
of dollars were loaned to Mr. Lewis and his enterprises in instances where 
a board of directors such as he represented he would choose would not have 
permitted the money to be loaned. In response to inquiry at the hearing, 
Mr. Lewis stated that this board of directors had never refused to make any 
loans which he requested. The fact that new directors have been substituted 
for some of the old ones does not materially affect the purposes of this inquiry. 

At the hearing Mr. Lewis was asked to show the vote of the board of 
directors for the loan of $50,000, hereafter referred to. He showed in the 
book where the count of the directors was recorded — a blanket approval by 
the board of all loans previously made. He said that this method of approval 
by the directors, subsequent to the making of a loan, was the method usually 
pursued. 

Mr. Lewis represented that all funds would be loaned by a committee com- 
posed of three directors each from the five principal banks and trust companies 
of St. Louis, that the funds of the bank could not be loaned to himself or 
other directors, and that the capital would be invested in Government bonds 
and other equally good securities. 



136 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

Some of the quotations in which these representations are made are given 
below : 

" The loaning of all its funds will be in the hands of a board or committee 
composed of three directors each from the five principal banks and trust 
companies of St. Louis, the funds being loaned by the People's Bank through 
these five banks and trust companies exclusively. * * * This loaning will 
make the People's Postal Bank the strongest and safest bank in the United 
States." (Exhibit C, p. 14.) 

" I will place the loaning of its funds in the hands of a board of 15 of the 
most experienced bankers of the country." (Exhibit E, p. 11.) 

' ; The funds of our bank are deposited in these 5 banks for loaning; 3 
directors from each of these 5 banks or 15 in all compose the advisory 
board of the People's Mail Bank, and by this board all loans are passed upon 
and all matters pertaining to the use of the funds of the bank are decided. 
* * * The directors can not, however, loan the funds of the People's Bank 
themselves, but can only appoint another bank and ?> new bankers from the 
new bank's board to take the place of the bank from which the amount has been 
withdrawn. The board of 15 advisors, composed of 3 directors from each 
of 5 banks and trust companies (who) have the exclusive power to loan the 
funds of the Postal Bank. The money that is subscribed to the capital stock 
of a bank must be either paid in cash or invested only in Government bonds 
or such absolutely safe securities that they will pass the inspection of the 
Government or State bank examiners, who make their examination at any 
time without a moment's warning. 

" The officers and directors can not borrow or use a dollar of its funds. I, 
who am arranging my personal affairs so as to take and pay for a million 
dollars of the stock, myself, and who will be its president, could not lend my- 
self a single dollar of the company's funds. 

" The officers and directors can not lend the money of the company, but all 
loaning of its funds is done under the direct supervision of five other great 
banks." (Exhibit F, pp. IS and 19.) 

" First, the bank is governed by officers and directors, but they can not lend 
its funds to anyone and can not borrow from it themselves ; second, by our sys- 
tem its loans are passed on, and the greater part of them, as I will explain, 
are guaranteed and secured by other banks with the best collateral ; third, the 
entire capital of $5,000,000 will be invested exclusively in Government and 
State bonds and the most gilt-edged securities, sacrificing the higher interest to 
the absolute safety. 

" Then five or more great banks guaranteeing the safety of our funds, the 
capital standing always as a great bulwark, as only the Government itself gives, 
because invested in Government bonds." (Exhibit H, p. 20.) 

" This bank of ours, with its capital invested in Government bonds and 
high-class securities, and which never speculates with its money, but deals with 
the other great banks, and holds them responsible — this bank of ours, which 
will be hedged about with every safeguard, and in which the man or woman 
with a few dollars can become an equal partner with the millionaire, offers yon 
an opportunity such as you will never get in your life again. You take no 
possible chance of loss under its plan of organization." (Exhibit J, p. 21.) 

"A bank which never speculating, its capital in gilt-edged security, and not 
lending its money on discount, shall forever stand as the tower of safety and 
strength to the million families whose savings and all it guards. Most banks 
have so many different uses for their deposits and so many large stockholders 
who are still larger borrowers that they could not handle a great bond issue all 
in one lump. We not only are free from these pulls, etc. 

" Once these matters have been fixed and voted upon in this way, the capital 
will be increased, and on December 24, Christmas eve, the stock will be allotted 
to the enormous list of subscribers, and so scattered in small loans throughout 
the entire nation that no man, no matter what his wealth, or any combination 
of men, can ever change the purpose for which this great bank has been organ- 
ized or ever divert its funds from the absolutely safe lines that have been laid 
down without first obtaining the consent of nearly 70,000 different stockholders, 
an almost impossible thing if evil was intended. Here is at last a bank of the 
people and for the people. In *iny other bank in this nation a few men hold a 
majority of the stock, run matters, and make or unmake its rules of business as 
best suits their own ends. In this bank the consent of tens of thousands of 
people must first be gained before any change that would affect the policy and 
purpose and the safety of their investment." (Exhibit K, pp. 22 and 23.) 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 137 

"The first thing and the main thins in the organization of this bank to he 
provided for is the absolute safety and security of the institution. * * * The 
question of safety stands ont as a 90 per cent proposition. In other words, this 
bank must never take any chance, so far as human intelligence and skill can 
provide against chance. * * * One of these by-laws provides that no change 
can be made in the fundamental principles of the bank and the lines of opera- 
tion without the consent of a majority of the stockholders. Next, the directors 
and president of the bank practically represent in the organization of the bank 
the same part as the Senate and the President do in the United States Govern- 
ment. The financial board represents the lower House of Congress, to use a 
simile: the financial board is composed of three directors from each of the 
five principal redepository banks. The members of this board are not directors 
of the People's United States Bank. Matters of bond issues and loans are 
passed on by the financial board first, and then come up to the board of direc- 
tors and president, who have the power of veto." (Exhibit L, pp. 22 and 23.) 

11 The management of the bank is divided into three parts. First, the officers 
who direct its daily business. Next, the board of directors, who have the 
power to pass on the loaning of its funds. So far this bank is just like any 
other bank; but now comes the third part of the governing power in our bank, 
which is not found in any other bank, and which makes it the safest bank in 
America. Under the usual organization of officers and directors, only the 
officers at the head of the bank, in conjunction with the directors, can do, 
within certain limits, pretty much as they please with the funds of the bank, 
both capital and deposits. They have power to loan these funds to whatever 
men or concerns they wish, and on such terms as they see fit. Enterprises in 
which the officers and directors may be personally interested frequently have 
courtesies extended to them, and money advanced them, which if publicly 
known would put the bank out of business. Investments are taken on and 
speculation gone into in many eases which would not have been considered for 
a moment but for the fact that officers and directors of the bank were per- 
sonally interested in them. In a great public institution such as I have organ- 
ized, in which people are placing their hoardings, and in many cases their 
very all, I have felt that additional safeguards and precautions must be thrown 
about it. Nothing that would tend to inspire the most implicit confidence must 
be omitted. * - * * In order to meet these conditions I devised a financial 
board, to be composed of 15 or more men, preferably bankers, and by the 
simple means of a by-law of the bank (by-laws can only be changed by consent 
of the stockholders) provided that before any large loan or investment of the 
loans of the bank should be passed on by the board of directors it must first 
be favorably passed on by the financial board. This enables me, as the mem- 
bers of the financial board are not themselves directors, to enlist the services 
on this board of able bankers in other cities, and takes out of the hands of the 
officers and directors the power and temptation to invest the funds of the bank 
for their own benefit. * * * It must gradually gain the absolute confidence 
of the people of the United States, rich and poor alike, with its capital invested 
in Government bonds, with its funds hedged about with such safeguards as 
have been provided, never speculating, free from the power and ' pull ' of ' high 
finance,' free from the intrigue of designing speculators, not being a bank of 
discount, it must get this confidence from sheer force of position." (Exhibit N, 
pp. 30 and 31.) 

" The entire capital of this bank will be invested in Government bonds or 
other gilt-edged securities. * * * The loaning of the funds of the bank will 
be done bv its proper officers, with the advice and counsel of its advisory board." 
(Exhibit II, p. 11.) 

"Under the plan of the People's Mail Bank the most absolute safety, is se- 
cured, coupled with the greatest earning power." (Exhibit R, p. IT.) 

"It is essentially a bank of and for the people, a bank that is controlled and 
owned by a vast number of people, and not by a few wealthy men. whose officers 
are elected by and accountable to nearly 100,000 people, and not to a little 
circle of men, all of whom are on the inside, and using its funds for their own 
purposes (no matter how wisely)." (Exhibit S, p. 5.) 

" Its capital should be invested in United States Government bonds and other 
gilt-edged securities. It should not be a bank of discount ; the investing of its 
funds should be in the hands of a body of experienced bankers drawn from 
other banks." (Exhibit S, p. 3.) 

" The financial board, in whose hands the investment of the funds of the 
bank, both capital and deposits, will rest, will be organized. Under our organ- 



138 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

ization, before any large loan or investment of the funds of the bank can come 
before the board of directors, it will first be passed on and approved by the 
financial board, composed of the most experienced and capable bankers, princi- 
pally officers of the redepository banks of our bank." (Exhibit S, p. 7.) 

" Practically the entire assets of the bank, both capital and deposits, are being 
held in the form of cash, being deposited with the leading banks of St. Louis, 
Chicago, New York, San Francisco, and other cities, on certificates of deposit 
at good rates of interest. It is the purpose to turn over to the financial board 
immediately on the increase of the capital and formal completion of the organi- 
zation the capital and deposits of the bank in cash, in order that the investing 
of it in high-class securities and Government bonds may be begun under the 
advice and counsel of the full board of experienced bankers. As we are not a 
bank of discount, we will not loan our money on notes without ample securities. 
Securities will always be gilt-edged and will always be worth more than the 
amount of the loan." (Exhibit S, p. 11.) 

"Under the plan of organization ®f the People's United States Bank, its 
capital must be invested in Government bonds and other high-class securities. 
Why? So that the depositor knows that the great capital of the bank, which 
is his security, can not be put into all sorts of schemes or loaned out to people. 
Has any other bank its capital invested in Government bonds? Not that we 
know of. What do banks do with their money? Loan it to merchants and 
others on their notes (promises to pay) mostly. Does the People's United States 
Bank do this? No; except when secured by high-class securities in addition to 
the note. It is not a bank of discount under ordinary conditions. What breaks 
banks ? Several things. First, an unexpected run ; second, loaning out its money 
unwisely or fraudulently; third, speculation; undue influence on the part of 
very large stockholders, diverting its funds into unsafe enterprises in which they 
are interested. With its capital largely invested in Government bonds, it would 
be in a position to meet any demand on it. Second, not generally loaning its 
funds out to merchants and others on their notes, but investing its funds in 
high-class bonds and other securities, they would be readily converted back 
into cash. Third, speculation is largely prevented by its charter and by-laws, 
and these can not be changed without the consent of nearly 50,000 people. . 
Fourth, there being no large stockholders and practically no way in which any 
men or body of men can secure hold of any large amount of its stock, no undue 
influence can be brought to bear in favor of any person or enterprise by a 
dominating stock holding. Why do not other banks invest their capital in 
Government bonds? Most all banks are owned and controlled by a few wealthy 
men. The safer the bouds and securities the capital is invested in, the lower 
the rate of interest that is received from them. The People's United States 
Bank, being the one great bank of and for the people, it is its guiding principle 
that safety must be first, Inst, and always considered, and profit next. How 
will the funds of the People's United States Bank be invested and the bank 
governed? The People's United States Bank is governed by its officers, who are 
elected by its stockholders and by its board of directors. Back of the board of 
directors is the financial board. This financial board is to be composed of able, 
experienced business men and directors of other banks and trust companies, but 
who are not directors of the People's United States Bank. When sufficient funds 
accumulate, the financial board is called together and passes on the various 
securities and bonds that are offered for investment. They recommend how the 
money shall be invested, and, while the directors of the bank can refuse to so 
invest it, they can only invest any large amount in securities that have been 
first recommended by the financial board." (Exhibit S, pp. 24, 25.) 

" As rapidly as is consistent with the best interests, and at the most ad- 
vantageous points in the market, it is proposed to invest the capital of this 
bank in United States and other gilt-edged securities, under section 18 of the 
by-laws of the bank, which reads as follows: 'The funds of the bank shall 
not be invested otherwise than in bonds of the Government of the United 
States or of tbe State of Missouri, or any other conservative and high-class 
securities,' the directors believing that while the investment of the capital of 
this bank in United States Government and other high-class securities, although 
bringing the bank a low rate of interest, it must inspire such implicit confidence 
in it as to insure an enormously high deposit." (Exhibit U, p. 10.) 

" Your investment in this stock should be next to Government bonds in 
security. Under our plan of organization the bank is not ordinarily a bank 
of discount, its capital principally in Government bonds and high-class securi- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 139 

ties. * * * The assets of the hank are almost entirely cash, Government 
bonds, and gilt-edged securities." (Exhibit V, p. 2.) 

" Through this advisory board all loaning of the bank's funds will be done. 
* * * All loaning of Ks funds will be in the hands of the advisory board." 
(Exhibit W, pp. 6, 7.) 

" Its funds are not loaned out to a few men who own its stock or to enter- 
prises in which they are interested. * * * Safety is the watchword of this 
bank always. Under its plan of organization it is the safest banking institution 
in America." (Exhibit X, p. 4 ; Exhibit FF.) 

The evidence shows that, contrary to the above representations, hundreds 
of thousands of dollars were loaned to Mr. Lewis and his various enterprises; 
that no advisory board has been established, but the funds are loaned practically 
at Mr. Lewis's will. 

The above-quoted representations and promises are the most important that 
are made throughout the literature. They may be regarded as the greatest 
inducement held out to prospective purchasers of stock and prospective de- 
positors. If the representations are untrue and the promises have not been 
kept, a great fraud has b^en perpetrated upon the public. I find that the 
above-quoted representations are untrue, and that the promises have not been 
kept. The facts which are stated below without comment will not permit of 
any other conclusion. 

The inspectors in their report dated May 12, 1905, after stating the facts 
above recited on pages 6. 7, and 8 of this memorandum, continue : 

" It further shows that E. G. Lewis had used $196,375.63, which was received 
from the * * * people as subscription for stock in the bank for his own 
individual purposes * * * and only made it good in notes when he found 
it necessary to pay in the capital stock. * * * The note for $50,000 of E. G. 
Lewis, referred to, is payable to the Mining & Investment Co. (another 
name for E. G. Lewis) and is dated December 12, 1904, and was turned into 
the bank March 15, 1905, and the amount of $50,000 was credited to E. G. 
Lewis's special account, the subscription account. Accompanying the note 
was a written instrument in Lewis's handwriting, reading as follows: 

" ' For and in consideration of the advancing to me of the sum of $50,000, the 
receipt of which is hereby acknowledged, I hereby sell, assign, and transfer all 
my right, title, and interest in and to my residence and 5 acres of land and 
improvements, located on the southwest corner of the University Heights sub- 
division, until the completion of a clear title to the same, when a first-mortgage 
deed of trust is to be executed by me in the place of this instrument to the 
Development & Investment Co. or its assigns. 

" ■ Witness. 

"'E. G. Lewis. 

" 'Assigned to the People's United States Bank. 

" ' Development & Investment Co., 
" ' E. G. Lewis, President: " 

" The collateral to secure the $50,000 note is an agreement on the part of 
Lewis to execute a mortgage when he obtains a title. If he never takes a 
title the security is worthless. The other note is unsecured, but it is alleged 
that this will be paid when the item charged to organizations — $146,375.63 — 
is allowed by the Secretary of State, then it will be paid from the earnings 
of bank. Or, in other words, by the stockholders. An affidavit was taken from 
Putnam as to this transaction, * * * from which it will be seen that when 
these notes were placed in the bank as an asset, on March 15, 1905, that no 
money was paid by the bank; hence they were placed there to cover money 
previously used by Lewis, so that in fact he was short, according to his own 
records, on March 14, 1905, $196,375.63." 

In their report the inspectors further state : 

" It also appears from the records of the bank and from records of the 
Lewis Publishing Co. that E. G. Lewis * * * had borrowed from the bank 
prior to March 15, 1905 : 

On note of Lewis Publishing Co $S7, 500. 00 

On stock of Lewis Publishing Co 23,000.00 

On stock of University Heights & Realty Co 12. 770. 00 

On note of University Heights & Realty Co 57,459.00 

On note of Edmunds Powers (Fiber Stopper Co.) 2.500.00 

On bonds of California Vineyard Co 7, 000. 00 



140 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 



" On March 15, 1905 : 

On E. G. Lewis unsecured note $50, 000. 00 

On account promotion of bank 146, 375. 63 

On note Lewis Publishing Co 5, 500. 00 

On note of Clawson & McCarthy 2, 000. 00 

On note of Sterling Remedy Co 500. 00 

Total 394, 604. 63 

" Thus, before the increase in capital stock from $1,000,000 to $2,500,000, E. G. 
Lewis, for himself and the companies in which he is financially interested, had 
taken from the bank $394,604.63 of the $500,000 paid in as capital stock by the 
original subscribers to the bank stock." 

On March 14, Mr. Putnam, cashier of the bank, gave the inspectors a state- 
ment containing the following item among the resources: Stocks and bonds, 
$64,900. When asked to list this item, he rendered a list containing, among 
other things, the following items.: 

California Vineyard Co.'s bonds, secured by trust de*ed to the Missouri 

Trust Co., St. Louis : $7,000 

Preferred stock of the Lewis Publishing Co., 230 shares 23, 000 

Preferred stock in the University Heights Realty & Development Co., 

1,277 shares, to be cashed at par, with interest, on delivery of bonds__ 12, 770 

All of the above are Lewis's enterprises and amounts in all to the sum of 
$42,770. 

In the same statement of the cashier of March 14 the item of $230,844.72 
appears. When asked to list the "loans and discounts" items, Mr. Lewis gave 
the following list as demand loans : 



Amount. 



Lewis Publishing Co. 

June 7, 1904 

June 6, 1904 

June 1 , 1904 

May 18, 1904 

Do 

May 14, 1904 

Do 

May 13, 1904 

May 12, 1904 

May 10, 1904 

Apr. 18, 1904 

Apr. 11,1904 

Apr. 9, 1904 

Apr. 8,1904 

Mar. 23, 1904 

Mar. 14, 1904 

E. G. Lewis, Mar. 9, 1905 

Lewis Publishing Co.: 

Mar. 8, 1905 

. Mar. 1,1905 

Sterling Bros., Mar. 1, 1905 

Lewis Publishing Co.: 

Feb. 28, 1905 

Feb. 19,1905 

Feb. 18,1905 

Do 

University Heights Realty & Development Co., Jan. 28, 1905. 
C. W. Clawson & Cal. J. McCarthy, Jan. 18, 1905 




Collateral. 



The above shows that Mr. Lewis began taking the money of his subscribers 
for his own use or the use of his companies from the time subscriptions for stock 
began to come in, and that he has continued to use the subscribers' funds in the 
same way down to the present time. He has done this in spite of the repre- 
sentations and promises that such a thing would not and could not be done. 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 



141 



On May 29, 1905. the bank published an official statement of the financial 
condition. Among the resources, the following items appeared: 

Loans and discounts, personal or collateral $507, G79. 55 

Loans, real estate 441, 263. 20 

Bonds and stocks 142,645.01 

This published statement is attached hereto, and marked " Exhibit GG." In 
response to a written request to furnish the itemized list of the above items, 
Mr. Lewis submitted the statements attached hereto and marked " Exhibit HH." 
The following loans and discounts contained in that list were made to Mr. Lewis 
or his enterprises and the directors : 





Amount. 


Collateral. 


E. G. Lewis, T. F. Cabot, E. W. Thompson, G. A. Ar- 
bogast, A. P. Coakley. 


?146,375.63 

390,000.00 

346,163.20 

1,000.00 

500. 00 

750. 00 

25,000.00 


1,000 shares Lewis Publishing Co. 

stock; 3,720 Controller Co. of 

America stock. 
15,000 University Heights Realty 




& Development Co. stock, and 
lien on building. 
First mortgage deed of trust. 


Theo. F. ilever. . . 




A. P. Coaklev 








E. G. Levis." 








In all 


909, 788. 83 









Out 'of a total of loans and discounts which the bank has made, namely, 
$948,942.75, less than $40,000 has been loaned to parties other than Mr. Lewis 
or his companies or the directors, and part of that $40,000 is loaned on the col- 
lateral of stock in his companies. Among the stocks and bonds given in the 
list are the following : 

20 vineyard income bonds, each covering 1 acre of vineyard in Sacra- 
mento County, Cal., secured by trust deed to Missouri Trust Co., 
St. Louis $7, 000 

1.373 University Heights Realty & Development Co. preferred stock 13, 730 

2,300 Lewis Publishing Co. (since taken out) 23,000 

In all 43, 730 

Out of a total investment of $142,645.01 in stocks and bonds Mr. Lewis has, in 
fact, invested over $43,730 in his own enterprises, contrary to all representations 
and promises made to the people whose money he thus took to invest in his own 
enterprises. 

As further showing the use which Mr. Lewis has made of the funds received 
by him as subscriptions to the stock of the bank, and about which he made the 
above-quoted representations and promises, the following taken from the report 
of the inspectors of June 6, and which in all material respects appears to be 
true, is useful : 

" During the last few days E. G. Lewis, F. J. Cabot, F. J. Carlisle, and a man 
named Edmunds formed an association for the purchase of the St. Louis Star, 
an afternoon newspaper published at St. Louis, Mo., the price being stated to us 
as S500,000. Edmunds is rated as worth about $2,000, and F. J. Carlisle is 
reputed worth about $5,000. Lewis and Cabot are connected with all of Lewis's 
companies and the People's United States Bank, Lewis being the president and 
on>e of the five directors and F. J. Cabot another director of the bank. F. J. 
Carlisle has just disposed of his interest in the St. Louis Chronicle, an evening 
St. Louis paper, for $4,000, and this, with some slight additional property, con- 
stitutes his financial condition. About May 29, 1905. F. J. Carlisle went to the 
People's United States Bank and borrowed $66,666.66 on his own unsecured 
note, it being stated that this amount was Carlisle's share of the payment to be 
made on the purchase price of the St. Louis Star. Word of this came to John E. 
Swanger, secretary of state, and on the 1st instant he caught and stopped pay- 
ment on $40,000 of the amount loaned to Carlisle. The deal concerning the sale 
of the St. Louis Star was then declared off, and that paper announced that there 
had been no sale of that paper. * * * On June 5, 1905, we interviewed 
Mr. F. J. Carlisle, in order that we might not misinterpret him concerning the 



142 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

transaction referred to, and he informed us that it was true that he had made 
arrangements with E. G. Lewis to borrow $66,666.66 from the People's United 
States Bank on his individual note without security and had deposited the note 
with the bank, but had not drawn the money when the deal for the paper was 
declared off by Nathan Frank, the then owner of the paper." 

The University Heights Realty & Development Co. mentioned above in con- 
nection with the loan and discount and stock and bonds items is a company 
organized by Mr. Lewis and incorporated October 31, 1902. The capital stock 
is $1,000,000. The officers are E. G. Lewis, president and treasurer; N. Lee 
Travers, first vice president; John A. Lewis, second vice president; and F. J. 
Cabot, secretary. The assets of the company consist for the most part of prop- 
erty purchased for $200,000 as a speculation in suburban property. The prop- 
erty, I understand, has been somewhat improved since its purchase, which 
improvement, Lewis stated, amounts to about $150,000. The liabilities of this 
company, including those to the bank above set forth, are: 

Notes, 3 and 4 year land purchases $656, 477. 80 

Other accounts 18, 222. 73 

In all 674, 700. 53 

The statement of the inspectors shows that Mr. Lewis sold the bank 1,277 
shares of his stock in this company at par, and it appears that this company 
borrowed from the bank $346,163.20. 

The Development & Investment Co. referred to in this memorandum is a 
corporation which Mr. Lewis organized for his personal purposes and was 
referred to by him at the hearing as a holding corporation for his various 
enterprises. 

The Lewis Publishing Co. is a corporation publishing the Woman's Magazine 
and the Woman's Farm Journal. 

Mr. Lewis is the largest stockholder of this corporation, being its president, 
and is in complete control. 

In connection with the use which Mr. Lewis has made of the funds of this 
bank and supporting the finding which I make that Mr. Lewis has violated his 
representations and promises to the public which he made in securing large 
amounts of remittances for capital stock and deposits, and which he and the 
bank are to-day receiving, it is proper to refer to the demands which John E. 
Swanger, secretary of state of Missouri, made upon Mr. Lewis, June 5, 1905 : 

" I. I require that at once you complete the full number of your directory, and 
that a successor be chosen to take the place of Mr. Coakley, resigned. The new 
directors together with Mr. Meyer, Mr. Coyle, Mr. Cabot, and Mr. Lewis will 
then constitute the board. I require that at the very earliest practicable time 
a stockholder shall be chosen as director in place of Mr. F. J. Cabot. Mr. Cabot 
is an employee of the Lewis Publishing Co., and his relation to Mr. E. G. Lewis 
is therefore such as to prevent that free and independent action in regard to 
the affairs of the bank which must characterize its proceedings hereafter. 

" II. I require the board of directors to at once take up the matter of the 
indebtedness of the Lewis Publishing Co. to the bank and to take immediate 
steps for the reduction and elimination of this item of indebtedness. The pros- 
pectus sent out by which the subscriptions to the capital stock and the subse- 
quent deposits were made in your bank promised that none of the funds of the 
bank would be loaned to any of its officers or enterprises with which they were 
connected, and this pledge of such a fundamental character must now be made 
good. Whether the loans to the Lewis Publishing Co. are good or bad is not 
now the question. The representations upon which this bank was started must 
be kept in good faith. 

" III. I require that the board of directors at once take up the matter of 
loans to the University Heights Development Co. and that immediate steps 
for the reduction and elimination of these items be taken. The reasons are 
the same set out under requirement II of this order. 

" IV. I require that the board of directors at once take up the matter of all 
other loans made to Mr. E. G. Lewis in person, or to enterprises owned or con- 
trolled by him or other officers of the bank, and that immediate steps for the 
reduction and elimination of such loans be taken. The reasons are the same as 
set forth in requirement No. II above. 

" V. I require that the board of directors at once take up the matter of the 
Investments of the funds of your bank in the stocks of other corporations and 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 143 

that immediate steps for the elimination of this unlawful investment of the 
bank's funds be taken. 

" VI. 1 require that the board of directors at once take up the matter of all 
other loans of this bank and give the securities for such loans their most care- 
ful scrutiny and if found to be in the least doubtful or insufficient that imme- 
diate steps be taken to reduce or eliminate such loans. 

" VII. I require that the allotment of stock to subscribers be made at once 
and in the order in which their subscriptions were received, and furthermore, 
that those taking stock on the installment plan are as much entitled to their 
allotment of stock, and in order their subscriptions were received, as are those 
that paid the cash; and above all, no discrimination should be made in the 
allotment on account of the signing or not signing of the proxies sent out by 
you at the time you advised the subscribers that the stock had been alloted to 
them. These proxies contain provisions which look very suspicious and caused 
a number of subscribers to complain to this department. Proxies are intended 
to subserve the interests of the stockholders, but when sought by an officer of 
the corporation creates a suspicion, and when largely obtained places in his 
hands a very dangerous power. The obtaining of these proxies in large num- 
bers in their present form we believe to be against public policy, and this 
department urges that these proxies be returned. 

" VIII. The item of $146,375.63, charged to promotion expenses, must be at 
once taken up by the board of directors and only such portion thereof as may 
be properly chargeable against bank retained as liability of the bank and the 
balance of the amount immediately collected from those whose note is now held 
by your bank for the entire amount or from those who have received such 
amounts so charged as are not properly chargeable against the bank. 

" IX-. You are hereby required to complete and keep a full and true record 
of the names of the stockholders of your bank, together with their place of 
residence and the number of shares or fractional part of a share held by each. 
This record we are advised has been kept, and if so then this requirement has 
been met, but we deem it best to call your attention to this very important 
matter so that no possible criticism could come from a neglect of this duty. 

" X. You are hereby required to transmit to this department with all speed 
the evidence that the several orders herein above set Out have been fully and 
faithfully complied with. 

"XL I shall continue my examination of the bank, and invite your sugges- 
tions and assistance to the end that the People's United States Bank may con- 
duct its business in a safe and authorized manner, for only in such event can it 
deserve or possess either the confidence of the public or the right to continue in 
business." 

It is true that in accordance with the first demand two directors have been 
elected and that the secretary of state has stated to Mr. Lewis that he is satis- 
fied that the present board of directors will carry out his other demands, but 
I do not think that such action by the secretary of state closes the matter or 
further inquiry by the Federal Government. The Federal Government has a 
responsibility even greater — certainly no less — than that resting upon the 
State authorities in this case. Not only have remittances for the capital stock 
been obtained through the mails, but remittances are being received at the 
present time by this bank, and according to its plan it is going to do a mail- 
order business and make the United States mails its principal agent. It has 
advertised this fact to the public, and stated in connection with it that the 
Federal Government's supervision gave an added security to the stockholders 
and depositors. The large amount of money which has been received, the 
large additional amount which would be received if the bank should continue 
tosoperate. and the fact that this money has been and would be largely received 
from that class of people who can ill afford to lose it, make me feel it my duty 
to exercise an entirely independent judgment as to whether or not fraudulent 
representations and promises have been made in the promotion of this bank 
and upon which it is to-day receiving, and will continue to receive, remittances 
through the mails. Demands 3, 4, 5, and S of the secretary of state have not 
been complied with. 

From all the evidence in this case I am forced to the conclusion that the 
representations and promises which Mr. Lewis made relative to loaning the 
funds of this bank in the above quotation are false and fraudulent ; and in view 
of the continuing violation of his pledges to the public by Mr. Lewis, I am also 
forced to conclude that he had knowledge of their falsity at the time of making 
them, and that they were made with the intent to deceive. 



144 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

lewis's control of the bank. 

In connection with the fact which has already been established, that Mr. 
Lewis has at all times been in absolute control of the bank and the loaning of 
its funds, the following representations and promises made to the public are seen 
to be misleading : 

" No body of men can secure control of the postal bank, no matter what their 
wealth. All the stockbrokers in North America couldn't collect together enough 
of its stock to elect a single director. This is the people's bank and will remain 
their bank. (Exhibit D, p. 22.) 

"A bank which no man or clique of men, no matter what their wealth was, 
could ever gain control of for their own evil ends ; a bank which was so free 
from the control of any body of wealthy speculators, so fearless and so strong, 
that it could send out a timely warning and would stand as a counselor and 
adviser for the vast number of people, etc. (Exhibit E, p. 11.) 

" No man or body of men can ever freeze out the small stockholders in our 
bank, for no man can subscribe for more than $500, and back of all this my great 
holdings are so trusteed as to stand like a very tower of strength. No other 
man could ever hope, no matter what his wealth was, to secure enough of the 
stock, no matter what he paid for it, to get himself elected a director unless you 
wanted him to be one. ( Exhibit F, p. 19.) 

" No man on earth can ever get control of our bank, no matter what his 
wealth, without the consent of a hundred thousand families. (Exhibit H, p. 20.) 

" It will attract the greed and covetousness of unscrupulous and wealthy men 
from all over the world. Do you see why a few weeks now in the careful 
thought and counsel of the ablest lawyers and best men is necessary to so organ- 
ize it that the small stockholder will forever have as much to say in its affairs 
as any other? Because all are small stockholders and no big stockholders can 
creep in. (Exhibit J, p. 30.) 

"A bank which can not be controlled by any body of ' financiers ' or ' pro- 
moters,' no matter what their wealth and power. (Exhibit K, p. 22.) 

"No man, no matter what his wealth, or any combination of men, can ever 
change the purpose for which this great bank has been organized, or ever divert 
its funds from the absolutely safe lines that have been laid down without first 
obtaining the consent of nearly 70,000 different stockholders, an almost impos- 
sible thing if evil was intended. 

" The object of this was that as one of the by-laws will provide that none of 
the fundamental principles of our great bank can be altered or changed without 
the consent of a majority of the stockholders, no man or body of men in the 
event of my death, or even I myself in life, can ever divert this great banking 
organization from its position as the people's bank without first obtaining the 
consent of over 60,000 stockholders, once the stock has been placed in the hands 
of the enormous list of stockholders. This makes the stockholder with $10 
invested as safe as though he held a million dollars of the stock. It places this 
bank out of the reach of the speculator and the promoter forever. (Exhibit L, 
p. 22.) 

" It is in your hands. No other banking organization is owned by and con- 
trolled by the people themselves. (Exhibit M, p. 30.) 

" No man on earth, no matter what his wealth or his resources, can ever 
gather together enough of this stock to secure a majority vote. Now that I am 
on this subject, let me bring out another phase of this institution. (Exhibit R, 
p. 17.) 

" This enables me to so fix the purposes and methods of doing business that 
no body of men, no matter what their wealth and power, can ever after g»t con- 
trol of the bank or divert it from the purposes for which I have organized it 
without first gaining the consent of nearly 70,000 stockholders." (Exhibit V, 
p. 1.) 

REPRESENTATIONS ABOUT THE SUCCESS AND GREAT EARNINGS OF THE BANK. 

A few of these representations are quoted below. Those quoted are not 
intended to be comprehensive of the representations of this character, but only 
as examples. 

" I believe that any of my readers who subscribed for the stock will have 
laid a foundation for a comfortable income for life from it. (Exhibit C, p. 14.) 

" The enormous success of our bank is now assured beyond question. * * * 
We shall have one of the largest and most powerful banks in the world. * * * 
I believe that every one of my readers who secures the limit of stock in the 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 145 

Feople's Postal Bank will have laid the foundation for a comfortable income 
and a small fortune. * * * 

" The enormous profit made from getting in at the organization and becoming 
charter members, securing the stock at par, goes this time into a hundred 
thousand homes. Will your home be one of them? Let me give you a single 
illustration : If you could have had the same opportunity to subscribe at par 
for $500 of the stock of the Fifth Avenue Bank of New York a few years ago 
when it was organized, you could to-day sell your stock for $18,625 and would 
have an income of $500 per year, or 100 per cent each year on your invest- 
ment. (Exhibit F, pp. 18, 19.) 

" Here are the prices of a few of the good bank stocks, per share : 

German Savings, Charleston, S. C $1, 500 

Union Trust, Pittsburg, Pa 2,200 

Whitney National, New Orleans, La 1, 000 

First National, Scranton, Pa 1, 525 

Old Colony, Boston ' 1,000 

German Savings, San Francisco 2,300 

Chemical National, New York 4, 235 

Fifth Avenue, New York 3, 725 

Hudson Trust, Hoboken, N. J 550 

Manhattan, Memphis. Tenn 600 

First National, Kansas City 700 

"And hundreds of others, but did you ever hear of people of moderate means 
getting them as charter members at par before? (Exhibit H, p. 20.) 

" The natural tendency of such an organization to grow wealthy and power- 
ful must in turn make its stock advance in value in proportion. If its stock- 
holders received 10 per cent in dividends the first year alone the stock would 
readily command three for one, so that in reality the stockholder would have 
received a dividend on his investment of 210 per cent. In the whole history 
of banking did you, or anyone else, ever before hear of the stock of a great 
bank being offered at par to people of moderate means? (Exhibit L, p. 15.) 

"A little of the capital stock purchased as you can now purchase it, at par, 
will mean comfort and independence to you and your children in the years to 
come. * * * If this bank of ours earns 12 per cent on its capital the first 
year alone your stock will sell anywhere in the United States at 400 per cent 
over what you paid for it, and each year it will become more valuable. If you 
could have secured $500 of the stock of the Fifth Avenue Bank of New York 
at par a few years ago, you could to-day sell it for $18,625, but it was not 
offered to you and the stock of a great bank will never again be offered to you 
at par. (Exhibit J, p. 31.) 

" I believe, and have good reason to believe, (it) will become the greatest 
and richest bank in America. * * * I believe in a few years that it will 
have become the most sought after and highest-priced bank stock in America. 
(Exhibit M, p. 30.) 

"A bank, rightly managed, begins to make money the moment it is incor- 
porated. Interest never sleeps. * * * Let me show you what this means 
by an illustration of a single bank here in St. Louis : 

" The Fourth National Bank of St. Louis, as the result of an original invest- 
ment in its capital stock of $160,000, has paid its stockholders over $3,000,000 
in profits and accumulated two million and a third of surplus and capital in 
addition. 

" The Second National Bank of St. Paul, Minn., has declared a 100 per cent 
dividend in October. This bank has paid a million and a quarter dollars 
in profits on a $200,000 investment since organized. 

" The stock of the Chemical National Bauk of New York sells for $4,235 per 
share, original par value $100. 

"Last year the banks of this nation earned an average of 21 per cent. The 
stock of a bank earning 21 per cent sells readily at 600 per cent over par. In 
other words, if our bank only earns what the average of other banks do, the 
stock you paid $500 for would be worth $3,000, and should increase in value 
each year. Our earning power should be far higher than the average bank 
and our expenses far lower." (Exhibit V, p. 3. See also p. 7, Exhibit W; 
see also column 1, p. 19, Exhibit R.) 

The above quotations are given to show the promises and representations 
which Mr. Lewis held out to the people whose remittances he was endeavoring 

86534°— 11 10 



146 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

to obtain. These representatioDs are unfair and misleading, and especially so 
when made to people unfamiliar with financial and banking matters, as many of 
the people appealed to were. Carrying on a banking business exclusively by mail 
is an experiment. It is not my function to consider whether or not it would 
succeed if honestly conducted. However, in view of the way that Mr. Lewis 
lias at all times handled the funds of this bank, and was handling them at the 
time these representations were made, I can only conclude that he made the 
last-quoted representations with the purpose and design of deceiving the people. 
It may be said, and has been said by Mr. Lewis, that these last-quoted repre- 
sentations are mere expressions of opinion, which can not properly be held to 
be false or fraudulent. In view of all the circumstances of the case I am forced 
to the conclusion that such of them as are expressions of opinion were not 
honest expressions. Furthermore, I give below a few of the statements which 
Mr. Lewis made throughout his literature as to the confidence which the readers 
did and should place in himself and his ideas and opinions. The question, 
therefore, of whether or not the opinions were honestly entertained by him is 
of more than ordinary importance. 

" From all quarters of the land, since my letter started to go out, thousands 
of subscriptions have poured in, nearly 200 bankers being among them ; 
and best of all, such letters of confidence and strength as I believe no man could 
read and fail to pledge his very life to be true to them. (Exhibit E, p. 11.) 

" No man could read the thousands upon thousands of ietters breathing con- 
fidence and good wishes that I have received from you, and not be a bigger, 
broader and better man for it. * * * I shall become the first president of 
the People's United States, capital $5,000,000, and with 100,000 stockholders 
spread all over the earth, who have placed their trust and confidence in me. 
Could I possibly fail to carry our great bank forward until it shall become 
the great central source of protection and constantly increasing income to its 
100,000 stockholders? * * * 

" I do not believe any other man in America has placed in him the faith, con- 
fidence, and good will that has been voiced in your letters to me, backed by 
your hard cash. (Exhibit M, p. 30.) 

"I have already been made the confidant and the trusted friend of nearly 50,000 
people. * * * I have received letters from some of the leading bankers, railroad 
presidents, and merchants of this country in which they have voiced their confidence 
in me and urged me to carry this through at all hazards." (Exhibit R, p. 17.) 

REPRESENTATIONS THAT THE STOCK WOULD ADVANCE TO SEVERAL TIMES PAR HAVE 

FAILED OF FULFILLMENT. 

Representations to this effect are cited below: 

' ' The fact that the subscription is limited to $500 to any one person makes it almost 
sure to advance to several times par the day the charter is granted. 

"I believe that this stock will advance to several times par the day the charter is 
granted." (Exhibit D, p. 22.) 

"Once the charter is granted no more stock can be purchased unless you can find 
some persons who are willing to part with some of theirs, and you can rest assured 
that they will want several times par for it. * * * 

"The probabilities are that many thousands who have subscribed for the full limit 
of $500 of the stock will shortly after the organization and issue of the stock sell a 
part of their holdings at a high premium, thereby adding greatly to the number of 
stockholders and the strength and resource of the bank. I believe that this stock 
will quickly become the most sought after and high-priced bank stock in the 
country. * * * 

"I believe that the stock will readily command a great deal more than you paid 
for it the very day the charter is granted." (Exhibit F, pp. 18, 19.) 

"A bank whose stock will undoubtedly command the highest premium that any 
bank stock ever commanded at organization. * * * I know now, and almost 
every banker here knows, that the stock of our bank will command such a high 
premium that each stockholder will have more than doubled his money the day the 
charter is granted." (Exhibit G, p. 12.) 

' ' Once the final issue of the stock is made, you can never again get it at par. * * * 
The capital stock of such a bank should command a very high premium the day the 
charter is issued." (Exhibit I, pp. 14, 15.) 

"The capital stock of such a bank should command three or four times par the day 
the charter is issued, and owing to its organization and its method of doing business, 
it should double in value from year to year until it becomes the highest priced and 
most sought after security in existence. (Exhibit R, p. 15.) 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 147 

"Once the stock issued, and those who subscribed for it at par have secured what 
will quickly become the highest priced and most sought after security in America." 
(Exhibit BB, p. 2.) 

Contrary to the above representations, a large amount of stock has been sold by 
Mr. Lewis and the bank at par, and they are still soliciting the sale of the stock at 
par. If these statements are to be regarded as expressions of opinion, in view of all 
the facts of this case, they can not be regarded as honest expressions of opinion. The 
representations were false, and Mr. Lewis must be charged with knowledge of their 
falsity. 

lewis's demand for proxies. 

There is one more feature which it seems necessary to touch upon in this memoran- 
dum and that is Mr. Lewis's demand upon subscribers for stock for proxies. Rela- 
tive to this the inspectors in their report say: 

"That the voice of the stockholders is silenced and has no part in the conduct, 
control, or management of the bank is absolutely demonstrated by the following 
contract of waiver and proxy made indispensable and a prerequisite to the issue of 
stock: 

'Peoples United States Bank. 

'Memorandum of delivery of stock, etc., (place) (date) 

'This memorandum witnesseth that, in consideration of the transfer to the under- 
signed by Edward G. Lewis, president of the Peoples United States Bank, of 

shares of the capital stock of said bank (amounting to the par value of $ ) I hereby 

authorize him to receipt for me and in my name on the books of said bank for the 
certificates of my said shares; and in consideration of his services in "the organization 
of said bank and of his acceptance thereof, I hereby request and appoint said E. G. 
Lewis to act as proxy to vote and represent my said stock at all meetings of stock- 
holders of said bank, in event I be not personally present; and upon his acceptance 
of this proxy the same shall remain in force until revoked by me after three years 
from this date, by written notice to said bank, but before any revocation it is agreed 
that said Lewis shall first have the option (upon ten days' written notice to him) to 
purchase said stock of me or my legal representatives, at its fair market value at the 
time; and I hereby ratify the proceedings taken for incorporation and operation of 
said bank for the increase of its stock, and hereby waive any right to subscribe for 
any increase of stock unless with the written assent of said Lewis, and I request said 
Lewis to cause to be forwarded to me the official certificate for my said stock, and 
upon his acceptance of the duties of proxy as aforesaid and due consignment of said 
certificate by mail to me, this memorandum shall become effective and not otherwise. 

'In attestatiun witness my signature, the date first aforesaid. 

^Yitness to signature: 

(Signed) 

(Address) 

'Address (State) 

"On April 8, 1905, Mr. F. G. Putnam, cashier of said bank, stated to Inspectors 
Fulton. Sullivan, and Stice, in the presence of E. G. Lewis, that 4,381 shares of the 
increased capital stock had been issued, and in every instance the stockholder had 
signed the forego ins: proxy and waiver before the certificate of stock was issued." 

This attempt on the part of Mr. Lewis to obtain and remain in control of the bank 
to the exclusion of the stockholders is most reprehensible, and I think conclusively 
shows the intent of Mr. Lewis to conduct the bank and handle the people's money 
for his own personal gain, and demonstrates the falsity of his many statements, made 
with so much emphasis, that this bank would be the people's bank and would be 
subject absolutely to the control of the people. The demand made upon Mr. Lewis 
by the secretary of state relative to the cessation from obtaining, and the return of, 
these proxies, is quoted above as Section VII of his demands. 

At the hearing the point was made by attorneys for the bank that if it should be 
decided that false and fraudulent representations and promises had been made to 
obtain remittances for stock, a fraud order should not issue against the bank, but 
only against Mr. Lewis, as the payments for stock were all sent to him. I am unable 
to take this view of the case. The representations which have been quoted above 
were made not only as an inducement for the remittance of money for stock of the 
bank, but also to obtain remittances for deposits. If those representations are fraud- 
ulent as to stockholders, they are equally so as to depositors. The bank has received, 
and is receiving remittances as deposits which were induced by the above-quoted 
false and fraudulent representations and promises. As appears from pages 4 and 5 of 



148 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

the People's United States Bank Reporter for April, 1905, and page 13 of the People's 
United States Bank Reporter for May, 1905, it is the intention to increase the capital 
stock of the bank to $5,000,000, and remittances are being asked for, not alone in the 
name of Mr. Lewis, but also in the name of the bank, for the remainder of the capital 
stock. Furthermore, I am unable to see how it is possible to separate the bank and 
Mr. Lewis in this matter. He has been, and is, in absolute control. The bank is 
the creature of his fraudulent representations and promises, and all of the money 
which the bank has received for capital stock and on deposit, and which it is now 
receiving, and will receive, is the result of the false and fraudulent representations 
of Lewis. The sole duty of the Post Office Department in this matter is to protect the 
investors and depositors, and prospective investors and depositors. I have carefully 
considered the facts in this case and all possible courses of action, to see if the interests 
of the investors and depositors could better be protected by some action other than, 
the issuance of a fraud order, but in view of all the facts in the case, especially the 
facts that Mr. Lewis is in control of the affairs of the bank and has now loaned to 
himself and his companies over $900,000 of the funds of the bank, I am of opinion that 
the Post Office Department, which has been and is the principal agent of Mr. Lewis 
in this enterprise, should demand an immediate accounting, and that it is my right 
and duty to recommend the issuance of a fraud order against the People's United 
States Bank, its officers and agents as such, and E.G. Lewis. 

R. P. Goodwin, 
Assistant Attorney General for the Post Office Department. 

The Postmaster General. 

After the Postmaster General had received this report of the 
Assistant Attorney General, and before deciding his action in the 
case, he called upon the Attorney General of the United States for 
advice as to his legal authority to issue a fraud order. In response to 
this request Acting Attorney General Henry M. Hoyt on July 6, 
1905, advised that the Postmaster General would be legally justified 
in issuing a fraud order. This opinion of the Acting Attorney General 
is published in volume 25 of the Opinions of the Attorneys General, 
at page 503. 

Following the issuance of the fraud order the bank commenced a 
suit in equity in the Circuit Court of the United States, Eastern 
District of Missouri, to enjoin the postmaster at St. Louis from enforc- 
ing the order. The case was heard by Judge McPherson, who denied 
the prayer for an injunction and dismissed the bill. Judge McPher- 
son's opinion is printed in volume 140 of the Federal Reporter, at 
page 1, and a printed pamphlet copy of the same is for convenient 
reference attached hereto, marked " Exhibit B." The bank appealed 
the case to the Circuit Court of Appeals, Eighth Circuit, and on April 
29, 1908, the Circuit Court of Appeals affirmed the decree of dismissal 
of the bill. 

The order against the bank is still in force, but the order as to Mr. 
Lewis was suspended on July 5, 1906. A copy of the order of suspen- 
sion and of the recommendation therefor by the Assistant Attorney 
General for the Post Office Department, are hereto attached, marked 
respectively, Exhibits U C" and "D," and these papers set forth the 
reasons for the suspension. 

Upon action by the authorities of the State of Missouri the Circuit 
Court of St. Louis County on August 15, 1905, appointed a receiver 
to take charge of the affairs of the bank and wind up the business. 
The bank took an appeal to the Supreme Court of Missouri, which 
reversed the circuit court. The decision of the Supreme Court of 
Missouri in this matter is reported in volume 94 of the Southwestern 
Reporter, at page 953. In passing upon the appeal the supreme 
court touched upon the matter of Lewis's promises made in promot- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 149 

ing the organization of the bank and the nonfulfillment of those 
promises, and in that connection said: 

(1) In the first place, plaintiff, as a chief contention, insists the facts show that 
because of promises made by a promoter before the incorporation of the bank, broken 
after its incorporation, the bank should be taken as born in the gall of bitterness and 
in the bond of iniquity, so to speak, as a preconceived and elaborate scheme to defraud, 
and hence the arm of the law should lift its properties and affairs out of the hands of 
its board of directors and administer them through the court's receiver. The con- 
trolling force of this contention is spent upon the insistence that one E.G. Lewis was 
its originator and promoter, and that as such he made certain fetching promises in 
soliciting subscribers to its stock, which good faith required should be kept by the 
bank, and which were not kept, except with punic faith. Not only so, but, when 
the secretary of state demanded that these promises should be kept, his demands 
were not only not complied with, but counsel were employed to resist them. To get 
at the merits of this contention it will be necessary to draw an outline of the situation, 
thus: Lewis is the president of the defendant bank, and at the same time the dom- 
inating spirit, as chief executive officer, of two other corporations — one, the Lewis 
Publishing Co.; the other, the University Heights Realty and Development Co. 
Incorporated on November 14, 1904, with a capital stock of $1,000,000 half paid up, 
the bank's original articles of association were signed by 18 persons, 17 subscribing 
5 shares each and Lewis subscribing 9,915, making 10,000 shares in all. On December 
12, 1904, the secretary of state satisfied himself by the examination required by 
Revised Statutes, 1899, section 1277, that the requisite capital "had been paid in 
in cash," and the bank was accordingly permitted to commence business. On March 
17, 1905, its capital stock was increased in due form of law by $1,500,000, fully paid 
up, and a certificate of such increase issued. So that, as we gather from the records, 
its capital stock was $2,500,000, of which $2,000,000 were paid up, and this capital 
had been furnished by, say, 60,000 people, living here, there, and yonder, at the 
date of the appointment of the receiver. We infer, further, that payments were being 
made (whether on assessments or not is not shown) and a fund being accumulated to 
pay up the whole of the original capital. We infer, further, that subscribers sent 
their money to Lewis, who kept the same in special deposits. W 7 ith these general 
preliminary observations, we come to the gist of the matter formulated as a grievance. 

It seems that prior to the bank's incorporation Lewis was the manager of two monthly 
or weekly publications, issued and owned by said Lewis Publishing Co. — one the 
Woman's Magazine; the other, the Woman's Farm Journal — and both were used by 
him to solicit subscribers (presumably women) to the bank's stock. To attain that 
end the following inducements, inter alia, were held out, and seem to have been 
effective, to wit, that the board of directors would be composed of seven strong men 
who had succeeded in building large fortunes of their own, i. e., men independent in 
fortune; that the loaning of the bank's funds would be in the hands of 15 of the most 
experienced bankers; that the directors of the bank could not and would not loan the 
funds of the bank to themselves; that such funds were to be deposited in five large 
banks for the purpose of loaning, and that three directors of each of these banks were 
to be an advisory board passing upon all loans; that the money subscribed to the cap- 
ital stock must be either held in cash or invested only in Government bonds or such 
absolutely safe securities that they would pass the inspection of Government or State 
bank examiners; that the bank's affairs were to be so closely watched by the Govern- 
ment and State officials that on the slightest sign of mismanagement or impairment of 
the bank's capital the examiner would at once step in and protect the stockholders and 
depositors; that he (Lewis) was arranging his personal affairs so as to take and pay for 
$1,000,000 of the stock himself, would be its president, and could not lend himself a 
single dollar of the bank's funds. Among other things, said Lewis held forth as fol- 
lows: "I pledge you all, here and now, that I will give my life and my heart's blood 
before one tiny speck of that confidence or one penny of that money shall ever be mis- 
placed. * * * It is the king of banks, the dictator of the wealthy man's bank, for 
it is the people's bank, created by their small sums each, all directors, none of them 
borrowers, and its debtors will be the great banking institutions of wealthy men. I 
am straining every nerve to organize for you what I believe to be the greatest bank in 
the world. I am arranging my resources to put a million dollars into our bank myself, 
and then trustee my stock, so that its earning will go into the reserve of the bank each 
year, and so that no wealthy scoundrel with the riches of Croesus can ever gain control 
of our bank; for he must first collect from all over the nation a million dollars of the 
stock in small sums to offset my single trusteed holdings. He could not do it. In 
your hands will always be the election of the officers and directors. Only by serving 
you truly and well can they hold their positions, and I tell you again that I would 



150 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

rather be president of that bank and the Woman's Magazine than President of the 
United States. * * * Never before have the people of moderate means been per- 
mitted to get in on the ground floor of a great bank. This bank of ours, with its capital 
invested in Government bonds and high-class securities, and which never speculates 
with its money, but deals with other great banks and holds them responsible. * * * 
I am not only putting nearly a million dollars into it myself, but am so doing it as to add 
to my share of its earning to the reserve of the bank, thereby doubling the value of 
your stock from year to year. * * * Putting your money into this stock is a very 
different matter from putting it into some mine, or oil well, or industrial enterprise. 
You take no possible chance of loss under its plan of organization. I would advise my 
own mother to put the last penny she had in the world into it. * * * I tell you 
frankly your profits will burn your hands. * * * I have pledged my fortune and 
my great publishing company to you in it. * * * I will sacrifice the flesh on my 
body before the purpose of this great bank shall be moved 1 inch from the path laid out; 
and I ask you in turn for that confidence and love, as it is the sweetest wine that can 
ever pass a man's lips. * * * A bank, which, never speculating, puts its capital 
in gilt securities, will forever stand as the tower of safety and strength to a million 
families whose savings and all it guards. * * * No man, no matter what his wealth, 
or any combination of men, can ever change the purpose for which this great bank had 
been organized, or ever divert its funds from the absolutely safe lines that have been 
laid down, without first obtaining the consent of nearly 70,000 different stockholders. 
* * * I will put a stumbling block in the path of the man whose greed for wealth 
shall ever tempt him to stock job or bleed it that will break his neck before he can sur- 
mount it. I hope to see the day when an election to the board of this bank will be 
harder to gain and more sought after than an election to Congress." 

It needs not the test of a cold, judicial touchstone to determine that a good deal of 
the foregoing is (using the word in its primary meaning) afflatus — rhodomontade. 
Thus: "Heart's blood;" "wealthy scoundrel;" "Croesus;" "I would advise my own 
mother to put the last penny she had in the world into it;" profits that will burn 
one's hand; the promise to sacrifice the flesh of his body; the "sweetest wine that 
can pass a man's lips," to wit, love and confidence; "tower of safety;" "strength to 
a million families;" "stumbling block in the path of a man whose greed for wealth 
shall tempt him to stock job or bleed " the bank that would " break his neck; " a "hope 
to see the day when an election to the board of directors" would be "harder to gain 
and more sought after than an election to Congress." What is all this but a flourish 
of trumpets of advertising rhetoric of the type used in the exploitation of bitters, 
Peruna, and liver pills; the transparent use of bold hyperbole, of which rhetorical 
figure it is said that "it lies without deceiving?" All lucubrations of that ilk fail to 
reach either the form or substance of enforceable promises. Nevertheless, when the 
mass is put in a reducing crucible of common sense, and the dross of mere verbiage 
is burnt and refined away, it stands forth, as said, that promises were made by him, 
and that, too, of a substantial sort. For instance, he promised, in effect, the bank 
should not be a one man's bank; that it should have a directorate of trained, inde- 
pendent, wealthy financiers, who might bring to the loaning of its funds the shrewd- 
ness and thrift of experienced wisdom; that the directors should not borrow its funds; 
that they should be deposited in large banks, and were to be kept in cash or invested 
in Government bonds or such absolutely safe securities; and that Lewis could not 
lend a dollar to himself. Now, how did the result correspond with the "sounding 
phrase of the manifesto?" How were these sensible and practical promises kept and 
performed by the corporation? Indifferently well, it must be admitted. For ex- 
ample, the bank was organized with a directorate composed of Lewis and nominal 
stockholders, Lewis's underlings at that; i. e., men subordinate to him in his other 
two ventures, mere vestpocket corporations of his, with not a banker in the lot, and 
within a few months after its organization nearly a million dollars of its capital are 
found loaned to the said publishing company and said development company, thus 
doing in a circuit (as the fox runs) exactly what he had promised should not be done 
in a straight line (as a bee flies), to wit, loan the bank's funds to himself or its directors. 

There are many matters discussed in the brief filed by the attorney 
for the Lewis Publishing Co. which are entirely immaterial and for- 
eign to the subject under consideration, and which it has not been 
thought advisable to consume the time of the committee in discussing. 
It is, however, perhaps not inappropriate to call attention briefly to 
a few of the most glaring of these misstatements. 

First, Mr. Madden complains that Mr. Lewis was indicted because 
of his fraudulent scheme in relation to the bank and also for con- 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 151 

spiracy to defraud the Government in regard to the postage paid on 
his publications. In regard to that, it is perhaps needless to say that 
the Post Office Department is not responsible for the initiation or 
prosecution of criminal matters. In all cases investigated by the 
post-office inspectors, where they believe that the evidence warrants 
a criminal prosecution, it is their duty to submit the evidence to the 
United States attorney for the proper district, and if he believes with 
them that a criminal prosecution is warranted he submits the matter 
to the grand jury, and the evidence being deemed sufficient by the 
grand jury an indictment is returned. In these cases the usual and 
ordinary course was pursued. The Post Office Department at 
Washington is not ordinarily informed in regard to the action of the 
United States attorney until after such action has been taken. This 
was true in these cases. After the Post Office Department was 
advised that the indictments had been found it was the earnest desire 
of the department that they should be speedily disposed of, and such 
action was insistently urged to the United States attorney. They 
were cases, however, demanding a large amount of time for investi- 
gation in order that a fair understanding of them might be had, and 
while Mr. Lewis was clamoring in his publications for a speedy trial 
the information of the department is that his attorneys were entirely 
content that the hearing of the cases be postponed indefinitely, and 
so expressed themselves to the United States attorney, and that the 
cases were finally brought to trial only when the United States attor- 
ney refused longer to continue them. While these cases were pending 
the United States attorney who procured the indictment was appointed 
district judge of the district in which the indictments were pending. 
It thereupon became necessary for his successor to familiarize him- 
self with the cases, and the judge being disqualified from his connec- 
tion with the cases as United States attorney to preside at their 
hearing, it was necessary to procure another judge to come to St. 
Louis to preside at the hearing. Every effort was used by the Post 
Office Department and by the newly appointed United States attorney 
to bring these cases to a speedy trial and determination, and they 
were disposed of at the earliest possible moment. 

Second, with regard to the civil suits, two of these suits were bills in 
equity filed by Mr. Lewis, praying that the postmaster should be en- 
joined in one case from refusing to accept the Woman's Magazine at 
the second-class rate, and in the other case from refusing to accept 
the Woman's Farm Journal. In both of these cases the decision was 
in favor of the Government. Mr. Lewis prayed an appeal in the case 
of the Woman's Magazine, which appeal was decided in favor of the 
Government, affirming the judgment of the court below. (See Lewis 
Publishing Co. v. Wyman, Circuit Court of Appeals for the Eighth 
District, reported in the advance sheets, Dec. 8, 1910, of the Federal 
Reporter, vol. 182, No. 1, p. 13.) As has been hereinbefore pointed 
out, this case goes far to sustain the contention of the department that 
the Lewis Publishing Co. is liable for postage on the excess copies of the 
papers mailed. In regard to the case of the Woman's Farm Journal, 
so far as the writers of this memorandum are advised, there has been 
no appeal taken. 

In regard to the suits brought for postage, the department believes 
that it has a meritorious cause of action against the Lewis Publishing 
Co. for a large amount of postage, and it would have been derelict in 



152 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

its duty if it had not caused the institution of these suits. The depart- 
ment has always been anxious and is now anxious that the suits 
should be tried and finally disposed of. Several months ago at the 
suggestion of the Post Office Department the Attorney General 
appointed Mr. Britt, who was at that time special counsel for the 
Third Assistant Postmaster General, and who is now the Third Assist- 
ant Postmaster General, and one of the writers of this memorandum, 
special Assistant Attorney General to try these cases. Since that 
time Mr. Britt has been using every effort to bring these cases to trial, 
but has been met with the fact that Mr. Lewis's attorneys were throw- 
ing obstacles in the way of a trial and were asserting that it was their 
intention to carry the injunction case to the United States Supreme 
Court and insisting that the postage cases should not be tried until 
that case was finally disposed of. 

Third, claim is made on page 82 of the Lewis brief that "the bank 
was able after it's destruction to restore to the stockholders 87 per 
cent of their investments/ ' This is grossly misleading. The fact is 
that at the time the fraud order was issued there was something over 
$2,000,000 of stock outstanding and something like $300,000 of 
deposits, making a total received by Mr. Lewis in the bank matter of 
in the neighborhood of $2,400,000, as is shown in the memorandum 
upon which the fraud order was based. Mr. Lewis had appropriated 
between $900,000 and $1,000,000 of this money for himself and his 
various institutions, and had given to the bank notes therefor. This 
left on hand deposited in the various banks of St. Louis at the time 
the fraud order was issued about $1,400,000. After the depositors 
were paid there was something over $1,000,000 left for the stock- 
holders. Immediately upon the issuance of the fraud order Mr. 
Lewis, through his publications, represented to his readers and to the 
stockholders in the bank that he had been grossly misused; that he 
and they were being persecuted; that the bank had been destroyed 
without an opportunity to be heard in its defense and at the behest of 
the money powers of the country; that, however, no stockholder in 
the bank should ever lose one dollar of his investment, but he, Lewis, 
would assume all of the loss and make good every dollar to every 
stockholder who had invested in the bank. He urged that they 
assign their stock certificates to him, and promised that upon receipt 
of them he would send them stock in his publishing company dollarfor 
dollar, or at their option would send them his trusteed notes for the 
face value of the stock, bearing 5 per cent interest, payable semi- 
annually. The trusteed notes were secured by a trust deed given 
upon his income over and above his living expenses. The capital 
stock of the publishing company, which he represented to be of great 
value and exceedingly profitable, was increased from $1,200,000 to 
$3,500,000, and this stock was sent to the stockholders of the bank in 
exchange for their stock in the bank. Through these representations 
he procured the assignment to him of $1,200,000 of the stock in the 
bank for stock in the Lewis Publishing Co. and $500,000 of stock in 
the bank for his trusteed notes, making a total of $1,700,000 of stock 
in the bank thus procured. In the meantime a receiver for the bank 
had been appointed in the State courts. After having paid the 
depositors as before stated, the receiver had on hand something over 
$1,000,000, which belonged to the stockholders, and announced his 
readiness to pay a dividend of 50 cents on the dollar. Thereupon Mr. 



RELItfF OF THE LEWIS PUBLISHING COMPANY. 153 

Lewis presented to the receiver the stock which had been assigned to 
him and received upon it 50 cents on the dollar, partly in notes of 
himself and his institutions and partly in cash. The receiver then 
announced his readiness to pay a further dividend of 35 cents on the 
dollar, whereupon Mr. Lewis presented to the receiver stock in the 
bank which had been assigned to him and received upon the same 
the balance of the notes of himself and his institutions which he had 
given the bank and the remainder in cash. So that in this matter 
Sir. Lewis secured the payment of his notes of something over $900,000 
and something like $400,^000 or $500,000 in cash. A further dividend 
of 2 per cent was finally paid by the receiver, making a total dividend 
declared of 87 per cent, as stated in the brief. The fact, however, is 
that only those stockholders who refused to transfer their stock to 
Mr. Lewis, and who, as has been shown, were only a small minority, 
actually received 87 cents on the dollar. Mr. Lewis received the bal- 
ance, and the holders of the $1,700,000 worth of stock which was 
assigned to him received his notes and stock in his publishing com- 
pany, as has been stated above. The first six months' interest on the 
notes was paid; there was also, we are informed, one small dividend 
paid on the stock of the publishing company. The notes are now 
long past due, and the best information of the department is that only 
in a few rare instances have they been paid. Practically nothing has 
been paid upon these notes and practically nothing has been paid 
upon the stock in the Lewis Publishing Co. which was issued to the 
stockholders of the bank. So that in truth the owners of $1,700,000 
of this stock have received practically nothing for their stock. There 
are submitted herewith marked "Exhibit E" some clippings from the 
Rural New Yorker, a farmers' paper published in New York, N. Y., 
which substantiate this statement. The department has also received 
many letters from persons holding these notes complaining that they 
could collect nothing on them. 

Fourth, complaint is made in the brief that certain circulars were 
sent out by the Post Office Department. Immediately upon the 
issuance of the fraud order, Mr. Lewis, as has been stated, through 
his publications complained bitterly of the alleged injustice that had 
been done him and published many pages of reading matter giving 
his version of the case, impressing upon his readers and the stock- 
holders in the bank, who were practically all of them his readers, that 
they had been grossly wronged and urging them to write to the Presi- 
dent, the Postmaster General, and to their Members of Congress pro- 
testing against the wrong which had been done them and insisting 
upon redress. Those letters came in to the department in large 
numbers. All letters addressed to the President were referred to the 
department for answer, and very many letters addressed to Members 
of-Congress were referred to the department for answer. To answer 
each one of those letters satisfactorily was impossible in the ordinary 
way, and for that reason the pamphlet submitted herewith and 
marked ''Exhibit F" was prepared and was sent out in answer to 
these letters. 

When the order was issued denying the second-class privilege to the 
Lewis papers, Mr. Lewis pursued the same course and again urged 
his readers to write to the President, the Postmaster General, and 
their Members of Congress protesting against the action of the depart- 
ment, and again the letters came in to the department in such numbers 



154 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

that it was impossible to answer them in the ordinary way, and the 
pamphlet submitted herewith marked " Exhibit G" was prepared 
and was sent out in answer to those letters. The situation which 
rendered the issuance of these pamphlets necessary was created by 
Mr. Lewis, and they were sent out in answer to letters that were 
written at his instigation. These pamphlets simply state the facts, 
which were a public matter and which any citizen interested in the 
matter had a right to know. Mr. Madden complains that the print- 
ing of them was a violation of law. In that construction we believe 
Mr. Madden to be in error, and are convinced that a reading of the 
statute will satisfy the committee that this action was fully author- 
ized, while as a business proposition it certainly was the only feasible 
thing to be done; and it has been for many years and is now the prac- 
tice of the department to cause to be printed in circular form such 
matters of information as will be required to be used in sufficient 
quantity to make that the cheapest and most desirable form in which 
to put them. The records of the Post Office Department are full of 
printed circulars and pamphlets prepared and issued by Mr. Madden 
while he occupied the position of Third Assistant Postmaster General. 
Any fair-minded man who reads the records in this matter must be 
satisfied that the Government officials have been actuated by no 
motive except an earnest desire to do their duty in the enforcement of 
the law to protect the Government and the public from loss. That 
there was a miscarriage of justice in regard to the criminal prosecu- 
tion does not in any way reflect upon the sincerity of the motives 
which actuated the Government officials in the course that they pur- 
sued. Upon the first trial of the case a motion was made to take 
the case from the jury and was overruled by the trial court. The case 
went to the jury and resulted in a disagreement, the majority of the 
jury believing the defendant to be guilty and so voting. Upon the 
second trial before another judge the jury was, as stated by Mr. Mad- 
den's brief, instructed to find the defendant not guilty. 

CONCLUSION. 

In view of the foregoing facts and considerations it would appear 
that the bill (H. R. 26799) should not be passed; and that the Gov- 
ernment is not indebted to the Lewis Publishing Co., of St. Louis, 
Mo., in the sum claimed, or in any other sum, because of the denial of 
the second-class mail privilege to the Woman's Magazine and the 
withdrawal of that privilege from the Woman's Farm Journal on the 
4th day of March, 1907, and the issuance of a " fraud order" against 
E. G. Lewis and the People's United States Bank on the 6th day of 
July, 1905. 

Very respectfully, 

R. P. Goodwin, 
Assistant Attorney General for the Post Office Department. 

James J. Britt, 
Third Assistant Postmaster General. 



BELIEF OF THE LEWIS PUBLISHING COMPANY. 155 

Exhibit A. 

Order No. 10.] Post Office Department, 

Washington, July 6, 1905. 

It having been made to appear to the Postmaster General, upon evidence satisfac- 
tory to him, that the People's United States Bank, its officers and agents as such, and 
E. G. Lewis, at St. Louis, Mo., are engaged in conducting a scheme or device for obtain- 
ing money through the mails by means of false and fraudulent pretenses, representa- 
tions, and promises, in violation of the act of Congress entitled "An act to amend 
certain sections of the Revised Statutes relating to lotteries, and for other purposes," 
approved September 19, 1890: 

Now, therefore, by authority vested in him by said act and by the act of Congress 
entitled "An act for the suppression of lottery traffic through international and inter- 
state commerce and the postal service, subject to the jurisdiction and laws of the 
United States," approved March 2, 1895, the Postmaster General hereby forbids you 
to pay any postal money order drawn to the order of said parties, and you are hereby 
directed to inform the remitter of any such postal money order that payment thereof 
has been forbidden, and that the amount thereof will be returned upon the presenta- 
tion of the original order or a duplicate thereof applied for and obtained under the 
regulations of the department. 

And you are hereby instructed to return all letters, whether registered or not, and 
other mail matter which shall arrive at your office directed to the said parties to the 
postmasters at the offices at which they were originally mailed, to be delivered to 
the senders- thereof , with the word "fraudulent" plainly written or stamped upon 
the outside of such letters or matter. Provided, however, that where there is nothing 
to indicate who are the senders of letters not registered or other matter, you are directed 
in that case to send such letters and matter to the Dead Letter Office with the word 
"fraudulent" plainly written or stamped thereon, to be disposed of as other dead 
matter under the laws and regulations applicable thereto. 



Geo. B. Cortelyou, 

Postmaster General. 



he Postmaster. 

St. Louis, Mo. 



Exhibit B. 

Opinion of Hon. Smith McPherson, sitting as judge of the Circuit Court of the United 
States, eastern district of Missouri, in the case of People's United States Bank, complain- 
ant, v. Henry J. Gilson, Henry P. Wyman, and Frank Wyman, defendants. No. 5192 — 
in equity. 

George H. Shields, Shepard Barclay, and Thomas T. Fauntelroy, for the complain- 
ant. 

D. P. Dyer, United States attorney, for the defendants. 

opinion. 
McPherson, Judge. 

This is a bill in equity filed by the People's United States Bank, a corporation 
existing under the laws of Missouri, in substance alleging the following facts: 

The defendant, Frank Wyman, is postmaster at St. Louis, and Henry P. Wyman is 
his assistant. Henry J. Gilson is in charge, under Frank Wyman, of the substation at 
Winner, outside of the city, but within the county of St. Louis. This substa-tion is 
connected with and part of the city post office. 

The bank was incorporated in November, 1904, by 18 persons, most of whom reside 
at St. Louis, but some of them reside in other States. The capital stock when incor- 
porated was $1,000,000, one-half of which was paid up. 

In March, 1905, the capital was increased to two and one-half millions, and the 
amount paid in is $2,435,000. 

The place of business of the bank is on the fifth floor of the Woman's Magazine 
Building, University Heights (outside the city, near Winner substation of the post 
office). 

The stockholders now exceed 50,000 in number, scattered all through the United 
States. 

The depositors reside in all parts of the United States, and many are in foreign 
countries. The amount of deposits are $220,000 or thereabouts. 



156 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

The practical operations of the bank are in charge of a cashier under bond for the 
faithful performance of duty, aided by two assistants and about 40 employees. 

The bank has been widely advertised. 

Considerable of the moneys arising from the sale of stock have been invested in 
interest-bearing securities, bonds, etc., while some has been invested in Govern- 
ment bonds, and $75,000 in municipal bonds, and other moneys are deposited in 
other banks calling for interest thereon. 

When the bank was organized, in November of last year, the secretary of state of 
Missouri, who has supervision of State corporations, including State banks, issued a 
certificate to the effect that it had complied with the laws governing such corpora- 
tions. Since then the Missouri secretary of state, both personally and by examiners, 
has repeatedly examined the affairs of the bank, and its affairs are conducted under 
the official scrutiny and subject to the most rigid examination of the said secretary. 

The depositors are to receive interest at such rates as may be agreed upon. 

The cashier, officers, and employees of the bank conduct the business so as to con- 
form to the directions of the board of directors, the governing body. There are also 
by-laws which are to control the affairs. 

The business is almost exclusively done by United States mail, and is very large, 
and is profitable and rapidly growing, and is conducted according to legal and honor- 
able methods, and in no sense is it a scheme or artifice to defraud, and is not a lottery, 
gift enterprise, or scheme for the distribution of moneys; and false or fraudulent 
promises, representations, or pretenses are not made and have not been made in, 
about, or concerning its business. 

June 1, 1905, R. P. Goodwin, Assistant Attorney General for the Post Office Depart- 
ment, sent to the bank through the mail a communication containing a memoranda 
or an outline of parts of reports of post-office inspectors concerning the bank, and 
required the bank to answer to a charge of conducting a scheme or device for obtaining 
through the mails money by means of false and fraudulent pretenses, representations, 
and promises, and with violating such parts of the postal laws as are contained in 
sections 3929 and 4041 of the Revised Statutes of the United States. Said communi- 
cation and memoranda did not disclose the names of the persons making the accusa- 
tions. They were not under oath. 

The bank, by its officers, appeared June 16, 1905, at the Post Office Department at 
Washington, and were directed to appear before Mr. Goodwin, the Assistant Attorney 
General for that department. The bank challenged the jurisdiction of that officer 
to hear the matter, which challenge was overruled by him. That officer demanded 
a showing against the charges, stating that unless a showing was made the charges 
would be taken as true, as he had already seen the reports of the post-office inspectors. 

The bank was denied the privilege of seeing said reports, no witness was sworn, and 
the bank was not confronted by any witness. The bank made a written return, 
supported by the affidavits, denying said charges, and showing that the business was 
conducted in a legitimate and honorable way, satisfactory to the authorities of Mis- 
souri, and setting forth the true state of affairs. 

It is also alleged that Mr. Goodwin is not an official of the Post Office Department. 

Later on, early in this month, the Postmaster General issued what is called a "fraud 
order" commanding the postmaster at the office of St. Louis which includes Winner 
substation, to stamp as fraudulent all mail received at said offices addressed to said 
bank and its officers, and return the same to the senders when known from the envelopes 
and all others to be sent to the dead letter office. 

The bill concludes with a prayer for subpoenas in chancery directed to the defend- 
ants, and for an order enjoining them from carrying out the "fraud order" of the 
Postmaster General, to the end that all mail addressed to the bank or its officers may 
be delivered. 

Such, in substance, is the bill on which the court is to grant or deny the writ of 
injunction. 

On July 12 instant a restraining order was issued, directing the postmaster to retain 
the mail in his office until the motion for injunction could be heard. 

The defendants have made a return to the order to show cause why the injunction 
should not issue. This return presents many questions of fact, calling for evidence, 
requiring the appointment of a master. 

But the court, believing the case was urgent, requested counsel to present the case 
as though pending on the verified bill in equity only. 

The case has been argued with an ability and eloquence very gratifying to the 
court. 

It has been seen what the bill charges. As affirmative relief is asked, it is pertinent 
to consider what the bill does not recite. 

The bill gives but partial information as to who of the many officers are on salary, 
and the amounts of salaries do not appear. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 157 

Who of the stockholders have a voice in the management? 

Do the original incorporators control the election of directors and officers? 

If all the stockholders vote, is it by proxy, and are the proxies voluntary or are they 
controlled by agreements so common of late? 

What dividends are promised to stockholders? 

Have the various stockholders equal rights as to voting or as to profits? 

It is said that some of the moneys are invested in Government bonds, other moneys 
in municipal bonds, and others in interest-bearing securities. Do the rates of interest 
received, after paying expenses, equal the interest and dividends paid out? 

To whom is the money loaned? 

Are the officers borrowing? If they are borrowers, either in person or through con- 
cerns in which they are interested, then in what amounts? 

How are such sums secured? 

If by personal surety, are the indorsers good? 

If by real estate security, then is the security ample for the debts? 

If ample, can it readily be converted into money? 

What relation, if any, does the bank sustain to the concern publishing the Woman's 
Magazine? 

Why are the by-laws not exhibited and the articles of incorporation pleaded, and the 
general scheme not disclosed? 

The bill recites that in the past the bank was conducted under the supervision 
of and with the approval of the secretary of State of Missouri. Why does not the bill 
charge that now the bank is conducted to the satisfaction of the officer of Missouri 
responsible to the people for its proper management? 

Why does the bill not charge that the stockholders who own the bank know the 
situation and are satisfied with it? 

How much money, if any, was paid in by the incorporators? 

If paid in, was it paid from their own moneys or did they subscribe and then borrow 
from the bank and then pay? 

Are the incorporators financially responsible? 

Why is this called a United States bank when it is a State bank? 

Most, if not all, these inquiries are pertinent. Probably other legitimate inquiries 
could be made. 

At all events, on the allegations of the bill, knowing only the information thus 
imparted, it is strange that any intelligent person could be found who would invest 
a dollar in the bank. 

And a prudent and honest bank examiner would never, on the information conveyed 
by the bill, make a report indorsing such a bank. Before doing so he would want much 
additional information along the lines suggested in the inquiries above suggested. 

I do not know what the facts are, and from what is before the court all the facts can 
not be stated. 

If the true situation is that of an honest, well-managed, and profitable bank, as is 
claimed, the facts can easily be disclosed. 

If, on the other hand, the bank was organized by insolvents, or if it is controlled 
by men who are not financially responsible, or if the bank has its being to furnish 
large salaries, or to advance money under the guise of loans to favorites who could not 
otherwise nor elsewhere borrow, and sometimes on doubtful security, then all fair- 
minded men will approve of the action of the Assistant Attorney General and the 
Postmaster General in denying the use of the mails to the concern. And it is no won- 
der that those officers held the showing insufficient if the showing was as meager 
as is now and here made by the bill. 

The showing here is one of liabilities of more than $2,500,000. The assets are stated 
in part only, as to what they are, and when they can be realized on. 

Many of the allegations of the bill are based upon the fact that the department 
refused to disclose the name of those complaining of the bank and refused to disclose 
the evidence relied on. The bank was given a memoranda showing the nature of the 
charge, which the bank was advised would constitute prima facie evidence of the 
warrant for a "fraud order." 

All of which means that the bank was called on for the privilege of using the mails 
to furnish evidence that it ought to be allowed to use the mails. Or, to state it in 
another way, the burden of proof was shifted to the bank. 

There is nothing new nor wrong in this. 

The recitals in a certificate of sale are prima facie proof of the truth of the recitals. 

The same is true when commissioners' accounts are audited. 

The auditing of accounts of clerks, marshals, Army and Navy officers, and many 
others is prima facie proof of the correctness of such statements of accounts, and the 
balances shown to be due by such audits can be recovered without other proof, unless 
the officer and his sureties overcome the same by evidence negativing such certificate. 



158 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

The post-office inspectors are public officers. Their findings carry a presumption; 
and it is a settled doctrine that when an officer is acting within his duties that his acts 
are prima facie within his authority, and that his findings are correct. 

This rule is even extended to criminal cases. In prosecutions for selling liquor in 
many States possession of liquor is prima facie evidence of a guilty intent to sell. It 
is the same as to cigarettes. There are many statutes, both Federal and State, which 
makes the doing of a thing or possession of a thing, usually of itself lawful, call for proof 
of an innocent purpose. I do not recall that any of such statutes have been held 
invalid, while I do know that it is of almost daily occurrence for the courts to enforce 
them. Complainant's contention on this point is in no way persuasive. 

One of the executive departments of this Government is known as the Post Office 
Department, and the head thereof is the Postmaster General. He has four assistants 
and a very large number of aids. 

Section 390 of the Revised Statutes provides that — 

"There shall be employed in the Post Office Department one Assistant Attorney 
General, who shall be appointed by the Postmaster General." 

One of the duties of the Postmaster General is — 

"To superintend generally the business of the department and execute all laws 
relative to the postal service." 

So that the allegations that Mr. Goodwin, the Assistant Attorney General, was not 
connected with the Post Office Department, and the complaint that he acted in the 
matter of hearing evidence and in recommending the " fraud order, " merit no attention, 

Everyone knows that the Postmaster General, in person, can not attend to the innu- 
merable duties of the department. It is enough to know that he acted, provided the 
acts are legal, and the legality in no manner depends upon the fact that he was assisted 
by others in the department. 

It appears from the bill that the bank was given a hearing before the Postmaster 
General, acting by the Assistant Attorney General. The bank had a prima facie case 
to overcome. It offered evidence. There was a controverted question of fact. On 
that question the constituted authority found adversely to the bank. 

No man has the right to have his mail delivered to him at his door free of charge. It 
is a privilege only. And the fact that it is a privilege so general as to be quite near 
universal does not make it less a privilege. Obscene letters and literature have no 
right to the mails, because it is the policy of the Government not to become a distribu- 
tive agency for such filth. And the same is true, and for the same reasons, as to litera- 
ture and mails building up or connected with a fraudulent scheme. Calling the con- 
cern a bank does not make it a bank. The fact that parts of its business are legitimate 
gives it no right to do an illegitimate business, and the Government is not called on to 
separate the illegitimate from the legitimate business, but will suppress the whole 
from the mails. Such business can not be separated. 

If it is an illegitimate business, the fact that men of good repute and of high standing 
are connected with it does not lessen the evil, but greatly aggravates it, because of 
the influence. 

I have not had time to write an elaborate review of the many cases. 

The one case that is pressed upon my attention is that of Rosenberger v. Harris (136 
Fed. Rep., 1001), decided by Judge Amidon. It appears from the opinion that the 
court was advised of all the evidence that was before the Postmaster General, which 
makes the case quite different from the one at bar. 

Aside from this, it must be conceded that the decision is quite a wide departure from 
the decisions heretofore made. 

But the fact is that the case was decided on the circuit, and the order granting the 
injunction has been appealed from, and the case is now under advisement by the 
Circuit Court of Appeals for this circuit. Therefore, however strong the reasoning of 
the opinion may be, it can not be urged as an authority. And while the opinion is 
well worth consideration, it must be read in the light of decisions, some of which are 
authoritative and others not of authority, but in my judgment equally persuasive. 

The cases decided by the Supreme Court of the United States are numerous, particu- 
larly in land cases, where the holdings have uniformly been that when an officer or depart- 
ment is empowered by Congress to determine a question of fact, that the finding of fact 
made is conclusive and binding upon the courts. These cases are familiar to all the 
counsel in this case, as well as the bar generally. Not only has the Supreme Court 
many times so held, but the Circuit Court of Appeals has at a recent date reaffirmed 
the proposition. All of which is conceded by counsel for complainant in the case at 
bar. 

But another rule is invoked, equally well settled by the Supreme Court, and that is, 
that errors of law by the officer or department can be and will be reviewed by the courts. 



EELIEF OF THE LEWIS PUBLISHING COMPANY. 159 

The Revised Statutes, 3929 and 4041, as amended by Congress September 19, 1890, 
and March 2, 1895, provide in substance that the Postmaster General may, upon evi 
dence satisfactory to him that any person or corporation is conducting any lottery, gift 
enterprise, or scheme, or device for obtaining money through the mails by means of 
fraudulent pretenses or representations or promises, instruct the postmaster at the 
home office of such concern to stamp such mail as fraudulent and return the same to 
the sender, when known from the envelopes, and all other mail shall be sent to the 
Dead-Letter Office, to be by that office opened and then returned to the sender. 

The wisdom and legality and morality of those statutes are doubted by no one. 

But for those and other statutes our magnificent postal system could be and, as 
experience shows, would be used as an effective agency, at nominal cost, to aid in 
carrying on all kinds of schemes, of debaucheries, and rascalities. 

It is well to consider what our postal system is. Under our Constitution is is created 
and kept going by Congress. It is a governmental monopoly which all the people 
indorse. There is no more brilliant phase of American history than that of our postal 
system. It has grown from the 25-cent letter to that of 2 cents, and from carrying the 
mail on horseback 40 miles per day and once per week to a daily mail to all, and in 
the cities many times every day, and the mail delivered at nearly every person's door. 

It is apparent that with such a system there must be some one in control, and that 
one is the Postmaster General. 

Whoever posts an obscene and lascivious letter earns a place in prison. The same 
is true of one who posts a letter in furtherance of a scheme to defraud. But it is a 
crime only to post such a letter. Therefore Congress was confronted with what should 
be done with letters posted by innocent people addressed to fraudulent concerns, and 
it was determined by statute that the Postmaster General should arrest and turn back 
all such mail; and, as it was evident that disputes would arise, the power to pass upon 
the question was lodged with that officer. 

Applying those laws and the reasons therefor to the case at bar, what do we have? 

Some one not disclosed made complaint of the bank in question. Post-office inspec- 
tors were assigned to investigate it. They are Government officers acting under oath. 
The responsibilities of their office are great, and but seldom is one found who is derelict. 
But for them this great postal system that works with the regularity of a clock would 
be clogged and would be honeycombed with all kinds of abuses. Their acts are of 
great importance and their reports carry great weight. 

And it is unreasonable to ask that the Postmaster General shall resort to the methods 
of taking evidence according to the rules prevailing in the courts. The reports are 
of necessity evidence on which he will act. They make their reports, and their 
reports, in the language of the statutes, was evidence satisfactory to him, the Post- 
master General, that the bank was engaged in a scheme to defraud. Then and there- 
upon the Postmaster General could have issued the "fraud order," but with that spirit 
of fairness which we would expect, he notified the bank to rebut that evidence. The 
bank had no right to make that showing. It was not obligatory upon the part of the 
Government. It was a privilege accorded, and in the judgment of that officer no 
sufficient showing was made. 

Therefore we have a case in which the Postmaster General was required to act. 
The subject of the inquiry was whether the bank was practicing a fraud upon the 
people — upon the unwary. That officer had jurisdiction of the subject-matter. He 
acquired jurisdiction over the bank, both by notice and by appearance. He received 
evidence satisfactory to him. This evidence, in his judgment, was not rebutted. 
He made findings, and those findings can not be reviewed by this court. And such 
is the holdings of the courts, as will be seen by a brief review of some of the cases. 

Enterprise Savings Association v. Zumstein (67 Fed. Rep., 1000) was decided by 
the Circuit Court of Appeals of the Sixth Circuit, Judge Lurton writing the opinion, 
concurred in by Circuit Judge Taft and Severns, district judge. That court ruled as 
follows: 

"Congress has the authority to empower the Postmaster General to refuse the 
delivery of letters to a corporation, upon evidence satisfactory to the head of the 
department, which is found to be engaged in a lottery scheme." 

In the case of Missouri Drug Company v. Wyman (129 Fed. Rep., 623), decided by 
Judge Thayer, the following conclusions were adopted : 

1. The right to use the mails is a statutory privilege, and, being a privilege con- 
ferred by statute, it can be taken from him. 

2. The Constitution conferred upon Congress the power to establish and maintain 
a postal system. This being so, Congress has the power, which it has exercised, to 
confer upon the Postmaster General the authority to prevent the mails being used to 
disseminate communications relative to schemes to defraud. 



160 BELIEF OP THE LEWIS PUBLISHING COMPANY. 

3. The question as to whether the use of the mails is in violation of law is a matter 
for the Postmaster General to determine. 

Public Clearing House v. Coyne (194 U. S., 497), held that Congress can and does 
control our entire postal system and may designate what may be carried and what shall 
not be carried as mail. 

It was further ruled by the Supreme Court of the United States in that case that due 
process of law does not require the interference of the courts, and that the executive 
power of the Government has functions to perform, and although it at times and tempo- 
rarily may operate with harshness upon individuals, the rights of the public must over- 
rule the rights of individuals. 

It was held in that case that the Postmaster General did not exceed his authority in 
issuing the fraud order. 

In the same report (194 U. S.), at page 106, the Supreme Court held in the case of 
Bates v. Payne, Postmaster General, that when the decisions of questions of fact are 
committed by Congress to the judgment and discretion of the head of a Department his 
decision thereon is conclusive. The court further held that even upon mixed ques- 
tions of fact and law his decision will carry a strong presumption of its correctness, and 
the courts ordinarily will not review it, although the courts in such cases have the 
power. 

The case of American School of Magnetic Healing v. McAnnulty (187 U. S., 94), is 
relied on by the complainant's counsel, and is urged with earnestness. The concern 
charged with fraud in that case, represented that the mind of man is almost solely 
responsible for the ills, pains, and diseases of the body, and is a factor in healing and 
curing such ailments and diseases. The bill further charged that the fraud order 
which had been issued, if not set aside by the court, would destroy a legitimate busi- 
ness. The case before the court below was not as to whether an injunction should 
issue, but was upon demurrer, which, of course, admitted all allegations of the bill to 
be true. And all that the Supreme Court held was that complainant was entitled to 
a hearing, a proposition not at all like the claim for an injunction before final hearing. 
That case in my judgment is in no sense controlling on the question now before this 
court. 

The proposition conceded by all, that if the Postmaster General committed an error 
of law, this court should enjoin the enforcement of the fraud order, is made the basis 
of an attack thereon by complainant's counsel. It is urged that if the evidence on 
which the fraud order was issued was meager or lacking, then the Postmaster General 
committed an error of law. There is no authority to sustain the contention in^any of 
the reported cases. To sustain such a contention would be equivalent to a writ of 
error from this court to review the decisions of that officer on the ground that his 
findings are not supported by the evidence. But he did have evidence before him. 
That evidence may or may not have been legal evidence according to the standard 
of the text-books. It may have been hearsay. It may have been secondary. It may 
have been delivered by an incompetent witness. Or it may have been such as the 
courts would receive; but whatever it was it was evidence satisfactory to him. 

And it is no sufficient reason to urge that by denying the injunction an injustice 
may be done the bank. 

As to that this court can not say. It may be that to issue the injunction an injus- 
tice would be done those already interested in the bank, and innumerable numbers 
of people who are at all times trying to get into concerns they know nothing about, 
and then soon try to get out. 

The Postmaster General in the case at bar moved with caution. He was aided 
at all steps by the Assistant Attorney General for that department. He was then 
advised by opinion by the Attorney General of the United States. 

Upon such a hearing it was that the "fraud order" was issued. And the results of 
such a hearing can not be, and should not be, decreed inoperative by a court. 
If this be not so, then in every case there must be a hearing by the courts, thereby 
usurping the prerogatives of the executive department of this Government. 

And one must have considerably less faith in this Government than I have to 
seriously believe that we are confronted with an impending danger of a tyrannical 
censorship over legitimate correspondence. 

The Postmaster General had, under the power with which he is clothed, the right 
to investigate the subject matter. It was his right and duty to ascertain whether 
the methods of the bank were to further a scheme by the use of the mails to obtain 
money by fraudulent means. His findings of fact were that such practices were 
carried on. He had the power to act. He committed no error of law, and his find- 
ings of fact are not open to inquiry by the courts. 

The restraining order heretofore issued is vacated, and the writ of injunction prayed 
for is denied. 

St. Louis, July 19, 1905. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 161 

Exhibit C. 

Order No. 1079.] Post Office Department, 

Washington, July 5, 1906. 

Ordered, That Order No. 10, dated July 6, 1905, forbidding the delivery of mail 
and the payment of money orders at the St. Louis post office to the People's United 
State? Bank, its officers and agents as such, and E. G. Lewis be, and the same is hereby, 
suspended so far as it affects the delivery of mail matter and the payment of money 
orders addressed to or drawn in favor of E. G. Lewis personally; this order to be effect- 
ive only so long as E. G. Lewis in good faith refrains from using his personal name 
in connection with the People's United States Bank or its operations; and be it 
further 

Ordered, That until otherwise instructed the postmaster ^ at St. Louis, Mo., here- 
after make delivery of mail matter addressed to E. G. Lewis and payment of money 
orders drawn in his favor. 

Geo. B. Cortelyou, Postmaster General. 



Exhibit D. 
[Memorandum.] 

Post Office Department, 
Office of the Assistant Attorney General, 

Washington, July 5, 1906. 
The fraud order against the People's United States Bank and its officers and agents 
as such, and E. G. Lewis personally, has been in force since July 6, 1905, or for a period 
of about twelve months. It is improbable that any mail of consequence having refer- 
ence to the People's United States Bank is now being addressed to E. G. Lewis, and no 
reason is seen why the fraud order as to him should be continued longer in force. The 
United States district attorney at St. Louis, under date of June 29, replying to an 
inquiry from this office, states that he "can see no reason for the further witholding of 
the personal mail of E. G. Lewis;" but he concurs in the suggestion made by me that 
the action of the order against Mr. Lewis be suspended, and not formally revoked. 

In a letter to you dated June 11, E. G. Lewis asks that you issue instructions to the 
postmaster at St. Louis to make delivery of all mail addressed to him in care of the 
Woman's Magazine or of the Woman's National Daily; undertaking if any mail so 
addressed is found upon opening to come within the terms of the fraud order, imme- 
diately to return the same to the post office. 

It is my opinion that the fraud order in question may properly be suspended so far as 
it relates to E. G. Lewis personally, but upon the understanding that the use by Mr. 
Lewis of his personal name to revive the People's United States Bank would be deemed 
sufficient ground for revoking the order of suspension, and putting the fraud order in all 
respects again in force. 

R. P. Goowdin, 
Assistant Attorney General 

for the Post Office Department. 
The Postmaster General. 



Exhibit E. 

[From the Rural New-Yorker, Feb. 26, 1910.] 

OTHER PEOPLE'S MONEY — WHEN YOU GET IT HOLD IT. 

For the benefit of confiding people who think they are going to get great benefits 
from money sent E. G. Lewis, St. Louis, Mo., for his new scheme, the so-called Ameri- 
can Women's League, we print herewith a photograph of a note given Mrs. Anna 
Orton, widow, North Tarrytown, N. Y., four years ago, and now 14 months overdue. 
Mrs. Elizabeth Dinsdale, of the same place, holds a similar note for $100. Mr. James 
Lunsden held a similar note for $300; but was induced by Lewis to exchange it for a 
receipt, which has never been paid. Mr. John R. Orton holds a preliminary receipt 
for $25 since August 30, 1905. All of these parties are at North Tarrytown, N. Y., 

86534°— 11 11 



162 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

and it is safe to say that no league will be formed in that town. When this note 
became due it was presented for payment through the Tarrytown National Bank and 
the Boatman's Bank of St. Louis. Payment on it was repeatedly refused by Lewis. 
The Dinsdale note was also presented for payment in the same way, and after re- 
peated refusals to pay by I^wis, the note was regularly protested. Lewis promised 
to pay it in 60 to 90 days. It isn't paid yet. 

Originally these people sent the money to Lewis for stock in the People's United 
States Bank. This was in 1904. The profits they were led to expect discounted 
520-per-cent Miller of State prison fame. The bank was capitalized for $2,500,000; 
and we understand the poor people through the country contributed nearly a million 
and a half of cash. The money he collected through letters and circulars, but princi- 
pally through a cheap woman's paper. Lewis promised to put up dollar for dollar 
of his own money with the country people, but it was found that he really didn't 
have any money of any account to put up and practically put in little or none. He 
also promised that the directors of the bank were to be other bankers and responsible 
men of St. Louis, and that none of the funds should be used for those interested. 
It was found that he appointed himself and his employees officers of the bank, and we 
believe he organized a publishing company and a speculating land company and 
used the funds of the bank to promote these schemes. He made one fatal mistake; 
he organized as a national bank, and when he began to violate the banking laws of 
Uncle Sam, he got the national-bank inspectors after him, and the bank was closed 
and fraud orders issued against him, so that neither himself nor the bank could use 
the mails. This was in the spring of 1905, and he was cut off from the use of the 
bank funds and also unable to collect more from the people. The people, however, 
had about $1,300,000 in the bank. The bank was to be closed up and the proceeds 
returned to the people, and Lewis set to work to put himself in position to control 
this money. He played high for it and got it in this way: He wrote the people that 
their bank had been assassinated by the Government; but he was going to save it for 
them. It was found that 87 cents on the dollar could be returned to the people, but 
Lewis promised them 100 cents on the dollar with interest if they would assign their 
claims over to him. You see the situation; Lewis was hard up for ready cash. He 
was willing to promise a bonus of 13 per cent to the people who turned over the 87 
cents to him without security. Of course he obscured the point. He played on 
the feelings and sentiments of the people. He claimed he was working only for them, 
to get justice for them, to restore the People's Bank, and eloquence of this kind by 
the yard. Well, Mrs. Dinsdale and Mrs. Orton indorsed their stock and sent it to 
Lewis as he requested and under his promise that he would pay the face value in full 
in three years with interest. They got the notes. In all Mr. Lewis got about $900,000 
out of the bank on notes of this kind sent him by the original investors in his defunct 
bank. They did not have the notes long, however, when he wanted to exchange 
them for stock in his land company. When this failed he wanted to exchange them 
for stock in his publishing company, and lastly he made repeated and frantic efforts 
to get them exchanged for stock in his new People's Trust Co., which, by the way, 
was supposed to be organized under State laws and not under inspection by United 
States inspectors. But these women held on to their notes, in spite of Mr. Lewis's 
hysterical efforts to induce them to put them into his possession by forwarding them 
to his trust company. The first installments of interest were paid on the notes, but 
no further payments have been made. 

All told now we have on file claims against Lewis aggregating several thousand 
dollars. All tell the same story. All were induced to send the money for the bank. 
Practically all accepted notes similar to the above, and Lewis, of course, got the cash 
for them out of the bank. Some of the victims changed from one stock to another as 
he requested and at times demanded. Many sent the notes back under the promise 
that the money was to be returned. What they got in return is the "interim receipt." 
Those who changed for Lewis Publishing Co. stock were promised dividends, and 
some of them got one or two small dividends. It is not apparent, however, that the 
company ever earned any dividends, and as it is an offense punishable in both the 
civil and the criminal courts to pay dividends where none is earned, this phase of 
the case may yet be examined as to its legal aspects. The whole mess as revealed 
in the correspondence and other evidence before us, is, in our judgment, one of the 
most flagrant and successful attempts at deception and fraud that we have yet exam- 
ined. Both Mrs. Dinsdale and Mrs. Orton were poor widows working to make a liv- 
ing for their fatherless children at the time Lewis induced them to accept his notes 
and turn over their money in his defunct bank. This money represents the small 
savings of widows, who sent it to him originally in $10 installments as they saved it. 
It is money that meant privation for mother and children. It may be a more legal 
form of getting possession of otiher people's money than meeting a man on the street 
and picking his pocket, but the children who suffered privation because Mr. Lewis 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 163 

got their mother's money could hardly appreciate the difference. For ourselves we 
would call it a respectable business to break open a bank safe and get away with the 
cash in comparison with Mr. Lewis's plan of taking bread out of the mouths of widows 
and their fatherless children. 

What do the deluded women who have fallen into his American Women's League 
scheme think of this? Can they hear the hungry cry of children appealing to Mr. 
Lewis to return their mothers' savings that they may have bread? Will they expect 
more from their labor and investments than these poor widows have received? This 
condition admits of no argument. Above you have the name and address of the 
women who have suffered and lost. In our files we can show you many similar com- 
plaints aggregating several thousand dollars in sums of $2 to $500, practically all 
from poor people, and most of it from working women. Lewis pretends now he is 
building up institutions of learning and culture and charity for women. Here is his 
record with helpless widows and orphan children. If there be anything more con- 
temptible in the history of fake schemes, we have yet to discover it. 

J. J. D. 

[From The Rural New-Yorker, Mar. 26, 1910.] 

We await with some interest to see our friend E. G. Lewis get over or under or 
around the proposition put up to him on the next page. He lias his chance of side- 
step, hopscotch, or leapfrog. In the end it is more likely to be "walking Spanish." 

OTHER PEOPLE'S MONEY — MORE ABOUT THAT LEWIS NOTE. 

The Free Press-Record, of Waverly, N. Y., recently reprinted an article from The 
Rural New-Yorker showing that E. G. Lewis, of St. Louis, Mo., defaulted on two 
notes held by parties at North Tarrytown, N. Y. In reply to this Mr. Lewis sends 
the Free Press-Record a long letter, the only pertinent part of which is the following: 

"The facts in the case are that full payment of the note to both these parties in 
North "Tarrytown was offered more than a year ago, together with interest. I found 
that their trustee notes were no longer in their hands, but were in the hands of a 
notary or lawyer in that town who demanded, in addition to the amount of the notes, 
a considerable "rake-off." This I refused to pay, but tendered the full payment of 
the notes and interest, and it is due solely to this party that these women never received 
their money." 

Mr. Lewis must be hard pressed for an apology and defense when he resorts to such 
a plain and deliberate falsehood. He evidently hopes by an apparently frank and 
definite falsification to turn away the wrath of honest people who have resented his 
treatment of poor women. The notary to whom he refers is Postmaster Johnston, of 
North Tarrytown, N. Y., and no man in the town stands higher in the community. 
He took this matter up solely in the interest of these poor women. He never asked 
any "rake-off " or fee of any kind from Mr. Lewis, or from anyone else for his services. 
On the contrary, he has spent his own time and funds in an effort to get the money 
for these women without any thought of ever getting back expense he has incurred. 
His word is sufficient; but in this case we have before us the written documents to 
show that Mr. Lewis deliberately lied in the above statement, which he has repeated 
to others in private letters. The papers before us show that Mrs. Dinsdale's note for 
$100 was deposited in the Tarrytown National Bank. The note was forwarded to the 
St. Louis County Bank, and it was presented at the office of the Lewis Publishing Co., 
January 11, 1909, and payment demanded for its face value and interest to date. 
Payment was refused, and the note was duly protested on that date by William H. 
Roth, notary public. The protest fee was $4 in this case alone. 

As to the Orton note for $508, Mrs. Orton wrote Lewis on February 2, 1910, as follows: 

"Dear Mr. Lewis: I am a widow with two sons and am keeping a few boarders and 
doing other small things in an endeavor to get along. During the past year, on account 
of sickness, I have been compelled to borrow money, which must now be paid. I am, 
therefore, in great need of the money due me on your 5 per cent note for $508, with 
interest from July 1, 1907. 

" During 1904 and 1905, when I had a small restaurant, I put into your business every 
dollar tnait I could raise, sending you $25 at a time and including $100 of insurance 
money which I received upon the death of my dear mother. The return of the money 
at this time when I so much need it would be a godsend to me. I am, therefore, 
sending the note to the Boatmen's Bank of St. Louis to be cashed for me. Please 
be so kind as to tell Mr. Putman, your treasurer, to pay the note when it is brought 
to your bank and help me out of my present great trouble. 
"Very respectfully, yours, 

"(Signed) Mrs. Anna Orton." 



164 BELIEF OP THE LEWIS PUBLISHING COMPANY. 

The note was forwarded through the bank on February 4. Following is the reply of 
the Boatmen's Bank of St. Louis: 

"Boatmen's Bank, 
"St. Louis, February 8, 1910. 
"Tarrytown National Bank, Tarry town, N. Y. 
"Mr. W. D. Humphreys, Cashier. 
"Dear Sir: Yours 4th instant at hand, with the E. G. Lewis note mentioned, 
memoranda attached, which we herewith return to you. 

"Referring to same, beg to advise that we communicated with Mr. F. V. Putman 

concerning said note, who stated to us that if the owner of said note would send same 

to him direct, he would remit in part (as they can't pay all at present); balance in 

a short time. Under the circumstances, all we can do is to return, which we now do. 

"Very truly, yours, 

"(Signed) E. M. Hubbard, 

"Asst. Cashier." 

Accompanying this note is memorandum for interest. No demand or request was 
made for anything more than the face of the note with interest. It is seen that the 
bank reported no dispute or offset of any kind. And all this only last month. The 
note was forwarded through the bank in February at our suggestion in order to give 
Mr. Lewis one more chance to pay before we referred to it in The Rural New-Yorker. 
It had previously been presented in the same way, January 6, 1909, by same bank, 
which wrote the Tarrytown bank, as follows: 

"Boatmen's Bank, 
"St. Louis, January 6, 1909. 
"Tarrytown National Bank, Tarrytown, N. Y 

"Gentlemen: Your letter 4th instant at hand, with E. G. Lewis 5 per cent trustee 
note, $508, which we herewith return to you. 

11 'Phoned maker, who is located in St. Louis County, some distance from the city, 
who informed us that he is not prepared to pay, but that he has communicated with 
all holders of his notes direct. Regret our inability to make collection for you; and I 
remain, 

"Very truly, yours, 

"(Signed) E. M. Hubbard, 

"Asst. Cashier." 

Previous to that it had been presented on September 4, 1908, and the Boatmen's 
Bank reported as follows: 

"Boatmen's Bank, 
"St. Louis, September 4, 1908. 
"Tarrytown National Bank, Tarrytown, N. Y. 
"Mr. Robert A. Patteson, President. 
"Dear Sir: Yours of the 31st ultimo duly at hand, with the note mentioned, which 
I herewith return to you, unable to collect. 

The People's Savings & Trust Co. is a long ways out — beyond the city's limits, 
which accounts for our not making earlier reply. Sent a special messenger out this 
morning, with the following result: Made personal demand on Mr. F. V. Putman, 
treasurer of the company, who instructed us to return, giving following reasons, 
namely, that the trust notes are payable subject to a bond issue which Mr. Lewis is 
now negotiating, and which will be completed in 60 or 90 days. Mr. Putman also 
said that all holders of these trust notes have been notified to that effect within the 
last two or three weeks. 

"Yours, very truly, 

"(Signed) Wm. H. Thompson, Cashier." 

All of this shows that the notes were presented several times through regular banks, 
and payment demanded, and refused with one excuse or another, but that no demand 
was made for collection fees. 

We know no high-class successful paper now that is in Mr. Lewis's league scheme, 
and some of those who allow him to send in their subscriptions at the same rates as 
other subscription agencies apologize for his financial schemes and admit that they 
could not and would not encourage them. For ourselves, we can not see how any 
self-respecting paper could permit him even indirectly to use its name by way of 
association in efforts to collect money from poor people. 

The Rural New-Yorker has only the object to protect the earnings and small savings 
of poor people. If we have said more about Mr. Lewis than about other fakers, it is only 
because he has been more persistent in his schemes to get money out of these poor 
people. In all, we have several thousand dollars of this money to collect for other 
people, all of which will be mentioned later. We had a letter from Mr. Lewis trying 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 165 

to discredit Mr. Johnston last week. We offered to send the notes through our bank 
for collection without expense to him, but he refused to say that he would pay them 
when presented. We have no doubt, however, that the notes will now be paid. No 
man can continue to neglect obligations of this kind after becoming public and con- 
tinue to work new schemes to collect money from the people. The notes will now be 
paid to pave the way for the promotion of the league scheme. But we doubt if the 
women of this country will continue to contribute to it in the light of such exposures. 

[From the Rural New-Yorker, Apr. 16, 1910.] 

OTHER PEOPLE'S MONEY — ANOTHER BUNCH OF UNPAID OBLIGATIONS. 

"In the last days of January, 1909, I loaned to E. G. Lewis, or the Lewis Publish- 
ing Co., $400 belonging to an old lady. I was to have a 7 per cent first-mortgage 
note for 10 months, note dated January 30, 1909. When this note and order came due, 
I sent it for payment to the People's Loan & Trust Co., of University City. The order 
for payment on the trust company was a part of the note. The trust company kept 
the note and sent me the inclosed receipt with no statement whatever. Then I wrote 
them again inquiring why the note was not paid, telling them again it was trust funds 
and I must have it right away. In reply to my letter I received the one inclosed from 
H. V. Putnam saying they had used the money on a real-estate deal, but would pay 
interest on the receipt. To this I replied I would send the receipt with sight draft 
attached. This went forward and they paid no attention to it. The draft was made 
December 28 and was returned January 18, 1910. 

"I wrote to Mr. Lewis telling him just how I was situated; that the money was not 
my own, but belonged to an old lady 90 years old; at almost any time I might be called 
on for some of this money. If I had to make this good right away it would take our 
little home. I begged him to send me the money and save me all the trouble, as it 
made me sick to think he could treat a man who had been a friend to him as I had. 

"I come to you as friends to help a poor old soldier out of this awful trouble, as my 
health is not very good and I have no money to go to St. Louis to fight, and perhaps 
get in prison before I get out of town. 

"How I came to give Lewis this woman's money is more than I can tell. Now my 
only hope is in you, as I have done all I can. Lewis has not replied to one of my 
entreaties. He simply keeps the money. If you think you can get the money, for 
God's sake do it. 

"Subscriber." 

The advertisement that caught this old soldier has a provision to the effect that at 
maturity the proceeds of the note could be turned over for trust company stock or 
Lewis Publishing Co. stock, or have the note paid in full in cash. In December they 
wrote him to forward note and check would be sent him, but when he sent it in a 
business way accompanied by draft, payment was refused. In all we have the follow- 
ing claims now for collecting against Lewis and his various schemes: 

Dr. F. A. B., Indiana, against United States Fibre Stopper Co., 50 shares. 

Mrs. M. H., New York, against People's United States Bank, $100. 

J. H. T., Wyoming, against United States Fibre Stopper Co., $5. 

D. L. L., Tennessee, against Lewis Publishing Co., $225. 

Mrs. A. B., New York, against People's Savings Trust Co., $25. 
L. M. S., Michigan, against People's Savings Trust Co., $50. 
J. S., Connecticut, against People's United States Bank, $25. 

E. J. S., Connecticut, against People's United States Bank, $5. 
G. E. E., Pennsylvania, against People's United States Bank, $30. 
Mrs. G. J. G., New York, against People's United States Bank, S25. 
E. A. W., Nebraska, against People's Savings Trust Co., $1,272. 

E. O. W., Nebraska, against People's Savings Trust Co., $320. 
R. H. C, New York, against Lewis Publishing Co., $12. 

J. R. O., New York, interim receipt, $25. 

J. L., New York, interim receipt, $300. 

A. D. D., New Mexico, trustee note, $3,000. 

Mrs. G. L. W., New York, against People's United States Bank, SI. 

M. A. P., New York, against People's United States Bank, $1. 

I. B. M., New York, trustee note People's United States Bank, ?100. 

A. G. M., Massachusetts, against People's United States Bank, $5. 

Mrs. A. H., New York, against People's Savings Bank, $6. 

Mrs. F. C. W., New York, against People's Savings Trust Co., $25. 

Fv. U., Pennsylvania, against Lewis Publishing Co., note, $400. 

F. S. Pv., New York, against People's Savings Bank, $4. 



166 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

F. A. R., New York, against People's Savings Bank, $4. 

H. R. J., New York, $100. 

Mrs. C. R., New York, receipt for notes, $2. 

F. C. R., New York, receipt for notes, $1. 

G. C. R., New York, receipt for notes, $1. 

Mrs. H. W. B., New York, against People's Bank stock, $200. 

P. B. M., Connecticut, against People's Mail Bank, $200. 

G. K., Virginia, against People's Postal Bank, $5. 

Mrs. T. M. B., Ohio, against People's United States Bank, $125. 

E. G. M., Virginia, against People's United States Bank, $500. 

R. F., Illinois, trustee note, $100. 

M. M., Missouri, trustee note, $55. 

Mrs. D. L. F., New York, trustee note, $50. 

L. C. S., Indiana, against trust company, $480. 

Besides the above we have succeeded in getting settlements for the following 
complaints: 

V. M., Connecticut, against United States Fibre Stopper Co., $22. 

Mrs. C. C, South Carolina, against People's Savings Trust Co., $25. 

I. O. W., Massachusetts, $15. 

R. R. R., Ohio, against People's United States Bank, $5. 

Mrs. S. A. R., New York, against People's Savings Trust Co., $6.10. 

Mrs. A. O., North Tarrytown, N. Y., note, $508. 

Mrs. E. D., North Tarrytown, N. Y., note, $100. 

E. H. EL, Massachusetts, against United States Fibre Stopper Co., claimed $10, 
refunded, $5. 

Mrs. E. P., New York, $10. 

We have made demand on Lewis for the payment of each and every one of these 
claims, but have been successful only in the cases reported above, and in the most 
important of these cases only after the facts had been published. In the case of the 
United States Fibre Stopper Co., the stock seems to have been sold direct under 
promises of great profits. In the case of the old soldier whose letter is printed above, 
the money was loaned direct on a note with promise to pay in full at maturity. Some 
of the other credits seem to have originated in the same way. But the majority of 
the money was originally put into the United States People's Bank, and when the 
receiver was appointed, Lewis induced them to accept his note for their claim, and 
in that way he got what was coming to them through the receiver. His plan then 
was to exchange the notes for other stock in his various schemes, and in that way keep 
the money. 

It is an old trick of fake financial promoters to have different forms of so-called 
securities to offer their deluded customers. When a patron becomes suspicious or 
dissatisfied with one security, in a great burst of apparent frankness and fairness, 
they offer him another stock or bond or certificate of some sort, in exchange for the 
original investment. This allays suspicions and fears for awhile, and, most important 
of all, it gives the promoter time to go ahead with his schemes. 

Lewis first sold the bank stock. Then he gave his notes for the stock. After that 
he traded stock in his publishing company, or his real estate company for the notes. 
The people who refused to make these exchanges had an offer to take trust company 
stock, and those who accepted got an "interim receipt." The two women at North 
Tarrytown, N. Y., refused all temptations to change the notes for anything except 
cash, and they now have their money. This old soldier loaned the money that he 
had in safe keeping for an old woman. He returned Lewis's note on the written 
promise that a check would be sent for it. In return he got an "interim receipt" 
entitling him to stock in a trust company later on, and not a word of explanation for 
refusing to send the check as promised. 

The New Mexico claim for $3,000 is based on a note similar to those held by Mrs. 
Orton and Mrs. Dinsdale, and the drafts for it have come back through the banks 

J'ust as theirs did. In the women's case, Lewis deliberately lied and said that Mr. 
bhnson, the postmaster, demanded a fee for collecting the money, and offered that 
as an excuse for not paying the notes. We proved conclusively by the papers that 
there was not even a semblance of truth in this pretense. What excuse has he now 
for not paying this Texas note, which is more than a year overdue, and on which 
interest payments were defaulted for over three years? 

We want this money returned to this old soldier for the benefit of the old woman 
who intrusted it to his keeping. We want Mr. Lewis to return it. There is no ques- 
tion of the facts or the ooTigations any more than there was in the case of the North 
Tarrytown women. We have the papers to prove the indebtedness. And we propose 
to insist on payment. Honest women from all parts of the country are writing us 
that thev were attracted bv the league scheme, but that the recent facts about the notes 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 167 

published in the Rural New-Yorker have opened their eyes. If these women will 
give a moment of serious thought to the contents of the Lewis papers we think they 
will see from the papers themselves that they are used principally for the purpose of 
collecting this money from poor and confiding country people, and that in helping 
circulate them these good women are unconsciously helping Lewis to allure money 
from poor, frugal people. 

J. J. D. 



Exhibit F. 



MEMORANDUM OF THE POSTMASTER GENERAL, AS EMBODIED IN A STATEMENT GIVEN 
TO THE PRESS JULY 9, 1905, IN RELATION TO ISSUANCE OF A FRAUD ORDER JULY 6, 
1905, AGAINST THE PEOPLE'S UNITED STATES BANK, ITS OFFICERS AND AGENTS AS 
SUCH, AND E. G. LEWIS, OF ST. LOUIS, MO. 

A fraud order against the People's United States Bank, its officers and agents as 
such, and E. G. Lewis, St. Louis, Mo., was issued by Postmaster General Cortelyou 
July 6, and went into operation July 9. The decision of the Postmaster General was 
reached after a full hearing of the case by the Assistant Attorney General for the Post 
Office Department, who recommended the issuance of a fraud order, and upon an 
opinion of the Attorney General, dated July 6, holding that the Postmaster General 
was legally justified in issuing the order. 

In response to a citation to show cause why a fraud order should not issue against 
them the People's United States Bank and E.G. Lewis appeared before the Assistant 
Attorney General for the Post Office Department on June 16 in the persons of George 
H. Shields and Shepard Barclay, attorneys, and E. G. Lewis, Frank J. Cabot, and 
H. L. Kramer, and made answer to the charges. Inspector in Charge Fulton and 
Inspectors Sullivan and Stice, who had made a thorough investigation of the bank's 
affairs at St. Louis and had recommended the issuance of a fraud order, also attended 
the hearing. The Assistant Attorney General laid the results of the hearing before the 
Postmaster General, who immediately gave the matter his attention. 

The evidence in the case showed that Mr. Lewis used the mails as his principal agent 
in promoting the sale of stock in his bank and securing deposits in the bank. The 
People's United States Bank was organized to transact all of its business by the use of 
the mails. The plan was to receive savings deposits, carry on a certified-check system, 
and do exclusively a mail-order banking business. Mr. Lewis began the promotion 
of this bank in the Woman's Magazine for February, 1904, and has in all subsequent 
issues of the Woman's Magazine extensively advertised this bank. Among the false 
and fraudulent representations and promises which the Postmaster General found Mr. 
Lewis had made in the promotion of his scheme were those relative to the amount of 
capital stock which Mr. Lewis had subscribed and would subscribe; representations 
relative to the independent, strong, capable men who would compose the board of 
directors; representations and promises that all funds of the bank would be loaned by 
a committee composed of 15 directors of the principal banks in St. Louis, and that the 
funds would not be loaned to himself or other directors. The Postmaster General 
found that in his early articles in the Woman's Magazine and in his other advertising 
literature about the bank, Mr. Lewis represented that he would subscribe to the capi- 
tal stock a dollar for every dollar subscribed by all others, so that he would own half of 
the capital stock, and that later he represented that he had pledged his entire fortune, 
every dollar he had, and his publishing business in this banking enterprise, and that his 
subscriptions would exceed a million dollars. These representations were found to be 
false and made with intent to deceive. 

The inspectors found that Mr. Lewis had not cooperated to the extent of a single 
dollar of his own money, although the bank had been in operation seven months and 
had a paid-up capital stock of $2,000,000. The inspectors found that Mr. Lewis had 
made an admission to that effect to Bank Examiners Cook and Nichols on April 3, 1905. 
The inspectors and their office force in St. Louis made a careful checking of the sub- 
scription books, finding that on March 15, 1905, Mr. Lewis had received and held as 
payment for shares of stock in the bank $2,289,043.61, and had accounted to the bank 
in an amount not exceeding $2,204,993.65. This showed that every cent of the 
$2,000,000 capital stock which had been paid in was paid out of subscription money 
received by- Mr. Lewis from the public, and that none of his own money had been 
invested in the enterprise. This was found to be the fact, although Mr. Lewis had 
stated in writing to the inspectors that $495,750 of the $500,000 paid in at the original 
incorporation of the bank were his personal funds. Subsequently at the hearing before 
the Assistant Attorney General Mr. Lewis admitted that that money was received by 
him from the people and was not his own. Although asked to do so at the hearing, 
Mr. Lewis failed to produce any evidence whatever that any of his personal funds had 



168 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

gone into this enterprise, or that he ever intended to subscribe, or was in a financial 
condition to subscribe, for the large amount of stock which he represented he would 
take. 

Contrary to Mr. Lewis's representations that the board of directors of this bank 
would be composed of seven independent, strong, capable men, "practically retired 
from active business," "standing between the intrigue and influence of the cold- 
blooded banking business and the people's money," the Postmaster General found 
that the directors chosen for the first year consisted of the five following persons: E.G. 
Lewis, Frank J. Cabot, editor of two magazines practically owned by Mr. Lewis; Augus- 
tine P. Coakley, E. W. Thompson, and G. A. Arbogast, employees of the Lewis Pub- 
lishing Co., which is under the control and management of Lewis. These men 
could not reasonably be presumed to guard the interests of the stockholders, as Mr. 
Lewis represented they would. That they did not guard the interests of the people, 
but complied with every request of Mr. Lewis for the loan of money, is evidenced by 
the fact that hundreds of thousands of dollars were loaned to Mr. Lewis and his enter- 
prises. Mr. Lewis stated at the hearing that the directors had never refused to make 
a loan he requested . At that time he was also asked to show the vote of the board of 
directors for a loan of $50,000 to himself on his personal note. He thereupon showed 
in the book where the votes of the directors were recorded, a blanket approval by the 
board of all loans previously made, it being dated ten days subsequent to the loan. 

The most important of the representations and promises which Mr. Lewis made and 
those which he repeated and emphasized most were to the effect that all funds of this 
bank would be loaned by a committee composed of three directors each from the five 
principal banks of St. Louis, that all loans which the board of directors might desire to 
make must first be passed upon by this committee of 15, and thus absolute security 
assured that the funds could not be loaned to himself or other directors, and further that 
the capital of the bank would be invested in Government bonds and other equally 
good securities. These representations were repeatedly and persistently made by Mr. 
Lewis from the beginning of his operations to the present time. In connection with 
them he frequently dwelt upon the dangers threatening banks in permitting officers and 
directors to receive loans . He said that ' ' enterprises in which the officers and directors 
may be personally interested frequently have courtesies extended to them and money 
advanced them, which if publicly known would put the bank out of business." 

The evidence showed, and Mr. Lewis admitted, that hundreds of thousands of dollars 
were loaned to himself and his various enterprises ; that no committee of 15 had been 
established, but that the loans had been made practically at Mr. Lewis's will. On 
March 15, the day after the inspectors began their investigation in the bank, Mr. Lewis 
placed in its assets two notes — one for $50,000, signed by himself alone, without col- 
lateral; the other for $146,375.63, signed by the board of directors. Mr. Lewis received 
no money from the bank at that time, the notes being put into the bank to cover money 
previously expended by Mr. Lewis. The last-mentioned note Mr. Lewis claimed 
covered money spent in promotion of the bank ; but, as the secretary of state of Missouri 
declined to allow the item, it stands as a personal loan to the directors. On March 15 
Mr. Lewis had loaned from the bank's funds to himself and his enterprises $394,604.63, 
the paid-in capital stock of the bank then being half a million. 

On March 29, when $2,000,000 capital stock had been paid in, a statement furnished 
by Mr. Lewis at the hearing, upon request, showed that he had loaned to himself and 
his enterprises $907,538.83. These loans included $146,375.63 to the directors, 
$390,000 to the Lewis Publishing Co., $346,163.20 to the University Heights Realty & 
Development Co., and $25,000 to E. G. Lewis. At that time Mr. Lewis had $43,730 
of the bank's money invested in stocks and bonds of his enterprises. The evidence 
further showed that Lewis had agreed to loan $66,666.66 of the bank's money on an 
unsecured note, but was prevented from doing so by Secretary of State Swanger. The 
University Heights Realty & Development Co., which had borrowed from the bank 
$346,163.20, and the stock of which to the extent of 1,277 shares Mr. Lewis sold to the 
bank, is shown to have assets consisting for the most part of land purchased for $200,000 
as a speculation in suburban property, and upon which Mr. Lewis stated about $150,000 
had been expended in improvements. Its liabilities are shown to be $674,700.53. 

The evidence also shows that Mr. Lewis made false and fraudulent representations to 
the effect that no man or body of men could ever get control of the bank or divert its 
funds from the absolutely safe lines laid down. Many other representations as to the 
success and great earnings of the bank, as to the advance of the stock to several times 
par, are found to be false and made for the purpose of deceiving. 

It appears, further, that until checked by the secretary of state Mr. Lewis endeavored 
to obtain proxies from all stockholders, appointing himself to vote the stock, which 
proxies should remain in force for three years at least, and in case revocation was desired 
in that time Mr. Lewis was to have opportunity to purchase the stock. On April 8, 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 169 

1905, the cashier of the bank told the inspectors that 4,381 shares of the increased 
capital stock had been issued, and in every instance the shareholder had signed a 
proxy to the above effect. This action of Mr. Lewis was contrary to his representations 
and indicates his intention to conduct the bank and handle the people's money for his 
own personal gain. It is in direct contravention to the many representations that this 
would be the people's bank and subject absolutely to the control of the people. 

It appears that on June 5 last John E. Swanger, secretary of state of Missouri, made a 
number of demands upon Mr. Lewis as to the future conduct of the bank, which corrob- 
orated the report of the inspectors aa to the condition of affairs above outlined. Since 
these demands, which, among other things required immediate return to the bank of all 
funds borrowed by Mr. Lewis and his enterprises, Mr. Lewis has failed to pay the loans. 

Mr. Lewis is receiving a large number of remittances for stock in the bank in his own 
name. The bank, through Mr. Lewis, its president, has sought remittances of money 
for deposits in the bank. These deposits are sought upon the same representations and 
from the same people as in the sale of stock. Upon these the bank is receiving remit- 
tances as deposits. It further appears that it is the intention of the bank to increase 
its stock to $5,000,000, and remittances are being asked for on that account. It is 
impossible to separate the bank from Mr. Lewis in this matter. The Attorney General 
to whom the Postmaster General submitted the matter for an opinion said : 

"I think there can be no doubt, upon the facts submitted, that E. G. Lewis, the 
maker of these representations and promises, is to be regarded as conducting a 'scheme 
or device for obtaining money through the mails by means ' of them. The facts stated 
represent him as the creator of the bank and absolute master of its charter, directors, 
stock, and funds, and as diverting those funds into the hands of himself and certain 
associates by way of loans to various companies of which he is the principal member. 

"The existence of a charter of incorporation — another legal 'person' — affords no 
protection to him. A corporation can be used as an instrument for the violation of 
law. * * * 

"As for the bank and its mail, we may, upon the facts stated, treat the constant 
public representations of its president, made with its acquiescence, and their fruits 
accepted by it, as its own, or look upon it as an 'agent or representative' of Lewis in 
the reception of the mail. 

"The bank seems, according to the facts stated, to be no other than Lewis himself, 
under a thin disguise." 

The Postmaster General, after a careful consideration of all the facts in the case and 
after considering all possible courses of action, decided that the interests of the public 
could be best protected only by the issuance of a fraud order against the bank and Mr. 
Lewis. 

It is understood that the funds of the bank which have not been borrowed by Mr. 
Lewis and his enterprises, amounting to about two-thirds of the total amount remitted, 
are deposited in banks and will be available toward reimbursement of the stockholders, 
who number upward of 65,000. It is the intention of the officers of the Post Office 
Department to cooperate with the secretary of state of Missouri in every proper way for 
the interests of the investors and depositors. 

Washington, July 9, 1905. 



Exhibit G. 



STATEMENT BY THE POST OFFICE DEPARTMENT IN THE MATTER OF THE WITHDRAWAL 
OF SECOND-CLASS MAILING PRIVILEGE FROM THE WOMAN 's MAGAZINE AND THE 
WOMAN'S FARM JOURNAL, ISSUED BY THE LEWIS PUBLISHING CO., OF ST. LOUIS, MO. 

The Post Office Department on March 4, 1907, excluded from the second-class 
mailing privilege the Woman's Magazine and the Woman's Farm Journal, monthly 
publications of the Lewis Publishing Co., of St. Louis, Mo., upon the grounds (1) 
that they do not have a legitimate list of subscribers, (2) that they are designed 
primarily for advertising purposes, and (3) that they are circulated at nominal rates 
of subscription. 

In the beginning it is proper to say that before withdrawing from these publica- 
tions the privilege of being transmitted in the mails at the second-class postage rate 
of 1 cent a pound, the publishing company was accorded two hearings before the 
Third Assistant Postmaster General, on the dates, respectively, of June 17, 1905, 
and April 30 and May 1, 1906, at each of which it was represented by its president, 
Mr. E. G. Lewis, and legal counsel; Henry H. Glassie, Esq., being present as advisory 
counsel to the Third Assistant Postmaster General. The entire investigation of the 
subscription lists and publication methods of the company, including the two formal 



170 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

hearings before the Third Assistant Postmaster General, and several informal hearings 
before the poetmaster at St. Louis and other officials of the Post Office Department, 
extended from March, 1905, to March, 1907. 

The publications named are of the "mail-order" type, and consist principally of 
advertising. The advertisements are of two classes, viz, editorial and space. Much 
of the regular advertising space, and of the editorial pages as well, is used as the 
medium for promoting various business enterprises and interests controlled in whole 
or in part by the president of the publishing company. The reading matter consists 
partly of short and serial stories, but largely of brief notes and miscellaneous clip- 
pings, such as are ordinarily contained in advertising circulars transmitted in the 
mails at the third-class postage rate of 1 cent for each 2 ounces. 

By statute it is provided as among the conditions upon which a publication may 
be admitted to the second class of mail matter that — 

" It must be originated and published for the dissemination of information of a public 
character, or devoted to literature, the sciences, arts, or some special industry, and 
having a legitimate list of subscribers: Provided, however, That nothing herein con- 
tained shall be so construed as to admit to the second-class n>te regular publications 
designed primarily for advertising purposes or for free circulation or for circulation at 
nominal rates." (Act of March 3, 1879.) 

In the Postal Regulations (sec. 437), applying these statutory provisions, it is said 
that — 

"Regular publications, designed primarily for advertising purposes, will include 
(a) those owned and controlled by one or several individuals or business concerns 
and conducted as an auxiliary and essentially for the main business or calling of 
those who own or control them; (6) publications devoted largely to advertising and 
having a nominal list of bona fide subscribers, but whose circulation is gratuitous." 

The president of the Lewis Publishing Co. has promoted or exploited, through the 
medium of the Woman's Magazine and the Woman's Farm Journal, more than one 
dozen of his private enterprises, one of which was the "People's United States Bank," 
against which a fraud order was issued by the Postmaster General on July 6, 1905, 
for the reason that sales of its stock had been made and deposits induced upon false 
representations and promises and that the funds of the institution were being mis- 
applied. 

Another of the leading statutory conditions upon which a publication may be 
admitted to the second class is that it have a "legitimate list of subscribers." The 
Postal Regulations provide that — 

"This list of subscribers must be legitimate in its entirety. And the sending of 
copies free to the recipients thereof to a number in excess of the number sent to actual 
subscribers will be taken as evidence that the primary design or chief purpose of 
the publication is not to meet a real demand on the part of subscribers, but to secure 
a forced circulation, within the prohibition of the statute against publications 
'designed primarily for advertising purposes, or for free circulation, or for circulation 
at nominal rates.' " 

Publishers of periodicals of the second class have the privilege of mailing at the 
1-cent-a-pound rate of postage (second-class rate) sample copies not exceeding in 
number the total of legitimate subscribers, and not oftener than three times a year 
to the same person, but it is provided that the words "sample copy" shall be marked 
upon the exposed face of copies sent as samples or upon the wrappers inclosing them 
or upon the wrapper of the package containing a number of sample copies in bulk. 

In March, 1905, the Lewis Publishing Co. represented to the Post Office Depart- 
ment that the Woman's Magazine possessed a paid-in-advance subscription list 
numbering 1,250,000, and that the paid-in-advance subscription list of the Woman's 
Farm Journal numbered 500,000. The company advertised at that time, and con- 
tinues to advertise, a guaranteed circulation of 1,500,000 for the former publication 
and of 600,000 for the latter. Presumably upon the basis of these circulations, the 
advertising rates of the two publications are announced to be $6 and $4 an agate line, 
respectively. 

An exhaustive inquiry into the publication methods of the Lewis Publishing Co. 
was instituted by officers of the Post Office Department in March, 1905, which 
extended to April, 1906. This was followed in May, 1906, by an inquiry conducted 
by different officers attached to another bureau of the department, which extended 
to February, 1907. It was ascertained that at the time of the beginning of the first 
of these inquiries, and until October, 1905, when a count of the subscription lists of 
the two magazines was made, it was the practice of the company to mail the publi- 
cations in wrappers of different colors and sizes, for the purpose of distinguishing 
between copies going to actual subscribers and those going to persons whose sub- 
scriptions had expired, or going as sample copies so marked, and copies irregularly 
mailed as samples and as going to subscribers, not marked "sample copy." It was 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 171 

disclosed that while over 600,000 copies of the Woman's Farm Journal were being 
mailed each month, of which less than 300,000 were mailed as to subscribers, less 
than 150,000 copies were, according to the company's own system of distinguishing 
wrappers, going to actual subscribers. Upon the basis of a claimed paid-in-advance 
subscription list of 500,000, and a guaranteed monthly circulation of 600,000, the 
advertising rate was announced to be $4 an agate line. To warrant its claim of a 
circulation of 600,000, the company must have had an actual subscription list of 
300,000 for this publication, and the president of the company made oath that it 
possessed actual subscribers in that number. 

At the hearing of June 17, 1905, the president of the company was asked, "How 
many copies are printed of each issue of the Woman's Farm Journal?" In reply he 
called attention to the sworn statement appearing regularly in issues of the publica- 
tion, and stated that for February, 1905, the circulation of the publication was 636,115, 
and that about two-thirds of that circulation was to subscribers. Mr. Cabot, secre- 
tary of the company, added, "It will average that; between 55 and 70 per cent." 
Mr. Lewis said, however, "It would depend upon the season of the year." Asked 
by the Third Assistant Postmaster General, "How many expired subscriptions have 
you on that Farm Journal?" Mr. Lewis explained that the company carried no 
expired subscriptions; that in the case of the Farm Journal the same policy was 
pursued as in that of the Woman's Magazine; and he later stated positively that this 
latter publication carried ' ' Not a single subscriber " after expiration of the subscription. 

On the basis of legitimate subscribers numbering less than 150,000, the company 
was entitled to mail an equal number of sample copies of the publication, provided 
they were, marked "sample copy." The total authorized mailing each month was 
therefore less than 300,000. Under no law or regulation was the mailing of the remain- 
ing sample copies, exceeding in number 300,000, at the cent-a-pound rate permissible. 
But it was shown that approximately 150,000 copies of the publication were being 
mailed monthly in plain wrappers as to subscribers, and without being marked 
"sample copy." This afforded* a basis for a still further illegal mailing of 150,000 
copies monthly marked as samples; the total number of copies of the publication 
mailed monthly in excess of the number authorized being thus about 300,000. The 
names used for these unlawful mailings were obtained from old letters purchased of 
mail-order business houses and from lists secured from defunct publications and other 
sources. These names were carded and divided by the company into ten "lot num- 
bers," each lot containing from 50,000 to 260,000 names. Monthly, names for illegal 
mailing purposes aggregating the number needed were taken from these lot numbers 
and so used, the copies going as legitimate subscriptions to such names and as 
samples. 

It was disclosed that while about 1,500,000 copies of the Woman's Magazine were 
being mailed, and while about 800,000 of these were going as to subscribers, only 
540,000, approximately, were, according to the system of distinguishing wrappers, 
mailed in pursuance of actual subscriptions. As previously stated, this publication 
was represented to have a paid-in-advance subscription list to the number of 1,250,000 
and a guaranteed circulation monthly of 1,500,000, upon the basis of which circulation 
its published advertising rate was $6 per agate line. The president of the company 
made oath that the list of actual subscribers numbered 800,000. Upon the basis of 
an actual list of subscribers numbering 540,000, the company was entitled to mail 
the same number of sample copies of the publication, provided they were marked 
"sample copy," so that the total of its legitimate monthly mailings of this publica- 
tion were, approximately, 1,080,000 copies. No more than this number of copies 
could legally be mailed at the second-class rate of 1 cent a pound; but in order to 
obtain the benefit of that rate upon the remaining 420,000 of its claimed circulation, 
the company was mailing monthly 210,000 in plain wrappers, as to regular subscribers, 
and was mailing a like number of copies marked "sample copy." The names to 
which these 420,000 excess copies were sent were obtained from purchased letters, 
defunct publication lists, etc., and were carded and divided into "lot numbers," 
apparently for the purpose of being so used. 

During October, 1905, following these disclosures, a very thorough count of the sub- 
scription card files of the Woman's Farm Journal and the Woman's Magazine was 
maae by officers of the Post Office Department, which more than confirmed the facts 
developed by the previous examination of mailings in the distinguishing wrappers. 
The cards so counted were the records from which the publications were mailed and 
were the only records from which the true subscriptions could be intelligently ascer- 
tained, it having been the practice of the company previously simply to card sub- 
scriptions when received, enter the cash upon its cash records, and destroy the sub- 
scription letter if it was in renewal of subscription, or discard it as a record by placing 
it in a miscellaneous file. Such files of letters were stored away monthly without 
any system of indexing or recording or supplying the undated letters with dates. 



172 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

It was pleaded by the company in excuse of this lack of business system and neces- 
sary records that the subscription price of the publications (10 cents per annum) was 
so low as to make an accurate and systematic record of subscriptions impracticable. 
This plea, however, was inconsistent with the claim of the company continually 
advertised, that its business was the most profitable publishing business in the world. 
During the progress of the original investigation by the Post Office Department the 
company changed its system of mailing in such a manner as to prevent the examining 
officers from ascertaining the actual number of subscribers for each of the publications. 

The failure of the company to affix dates to undated subscription letters, to retain 
and file properly letters in renewal of subscriptions, and to separate original sub- 
scription letters from these renewed subscriptions and properly and systematically 
file and index them, made possible the manipulation and padding of its files in such 
manner as to conceal the wide discrepancy between the actual number of subscrip- 
tions and the number claimed and advertised for each of the publications. 

The postmaster at St. Louis made inquiry of postmasters at the post offices of 
address of 1,000 of these excess copies of the issue of the Woman's Farm Journal for 
October, 1905, and the replies received showed that 90 per cent of the persons to whom 
such copies had been mailed had never subscribed for the publication. Five hun- 
dred names taken from similar copies were submitted to the publisher, with the 
request that he exhibit card records showing that they represented persons whose 
subscriptions had expired, but he was able to supply only 6 such names of the 500 
claimed. Later he repeated his claim that these excess copies were mailed to persons 
whose subscriptions had expired, but on being confronted with the results of the 
inquiries made by the postmaster and the investigating officers admitted that such 
copies had been mailed not to persons whose subscriptions had expired, but to per- 
sons whose names had been selected by him. He then claimed that payment for these 
copies was made from a special fund contributed by his sympathizers, but failed to 
substantiate this statement. These excessive mailings were, in fact, sample copies 
illegally mailed. 

It was further disclosed by the official inquiry that a considerable proportion of the 
subscriptions to each of the publications had been obtained at the club rate of 5 and 6 
cents each instead of at the advertised rate of 10 cents per annum; that many sub- 
scriptions were being furnished free and others at greatly reduced rates in pursuance of 
advertising and clubbing arrangements; that the average amount received, according 
to the statement of cash receipts of the company, upon the copies of each publication 
mailed was approximately 3J cents per copy per annum. The annual receipts from 
subscriptions to the Woman's Magazine for 1905 were about $50,000, while the postage 
upon the 1,500,000 copies mailed monthly, at the rate of 1 cent a pound, amounted to 
more than $36,000, leaving but $14,000, or an average net subscription price after pay- 
ment of postage of less than 1 cent per copy per annum for copies mailed. No con- 
sideration is given in this calculation to the large money prizes periodically paid by 
the company to subscription agents. The annual receipts from subscriptions to the 
Woman's Farm Journal are, approximately, $15,000; the total sum received in sub- 
scriptions for the two magazines per annum thus being less than $65,000, while the 
publisher continues to advertise that "two million people each pay 10 cents per year 
for our magazines, but when we get it it is $200,000." 

In explanation of the mailing of 600,000 copies monthly of the Woman's Farm 
Journal, and of 1,500,000 copies monthly of the Woman's Magazine, upon the basis of 
actual subscription lists of 150,000 and 540,000, respectively, the president of the com- 
pany stated that the excess copies mailed as to subscribers were going to persons whose 
subscriptions had expired. But each of the publications was carrying the following 
notices: 

"Discontinuances: Subscribers wishing the Woman's Magazine stopped at the 
expiration of their subscription need not notify us to that effect. We shall consider it 
their wish to have it discontinued if they do not renew promptly when notified that 
the time paid for has expired. 

"If you find this paragraph marked, it means that your time is out and that we will 
stop sending the magazine if not renewed within 30 days. We don't want to lose you, 
so please renew at once. If your paper comes in a blue wrapper, it is also a notice to 
you that your subscription has expired." 

It was shown that this published rale was being followed up to and including the 
month of October, 1905, the time of the original count and investigation, but that for 
the sake of convenience the current subscription cards were being separated from the 
expired subscription cards every three mo nths in the case of the Woman's Magazine 
and every four months in the case of the Woman's Farm Journal, instead of every 30 
days, and that thereafter the cards representing expired subscriptions were used only 
three times a year for sample-copy purposes. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 173 

The following questions and answers are quoted from the reported proceedings at the 
hearing of June 17, 1905: 

"Q. How many copies are printed of each issue of the Woman's Magazine? — A. 
About a million and a half of each issue. 

"Q. How many subscribers have you now? — A. In the neighborhood of a million, 
paid in advance. 

"Q. Have you any expired subscriptions? 

"(Mr. Lewis appealed to Mr. Cabot, who stated that subscribers are not carried on 
the list after they have been notified of the expiration of their subscriptions.) 
******* 

"Mr. Glassie. You don't give any credit to the subscriber at all? 

''Mr. Lewis. Not at all. (He then stated that of course there might be mistakes; 
that there might be delay in sending out the paper in a green wrapper, etc., but that 
they offer a premium of 1 cent for the detection of each error of that kind.) 

"Mr. Glassie. I mean your policy is the moment a subscription expires notice is 
sent — what is your policy? 

'"Mr. Lewis. When a subscription expires the magazine is sent out in a green 
wrapper, and that is practically the end of it unless that subscriber renews. 

"Mr. Glassie. You don't carry a subscriber who has expired? 

"Mr. Lewis. Why, no; that person has already received the paper for a year, and if 
he doesn't renew it is evidence that he doesn't want to. 

"Mr. Glassie. Your definite statement is that your policy is not to carry a single 
subscriber after his subscription expired? 

"Mr. Lewis. Not a single subscriber." 

Near the head of the business column of the Woman's Magazine was regularly carried 
the following statement: "Entered at P. O., St. Louis, as second-class matter, Decem- 
ber, 1899." As a matter of fact, entry to the mails as matter of the second class had 
not been granted to the publication, and the statement that it had been so entered was 
in direct violation of the following postal regulation: 

1 ' Printing notice of entry in publication. — The words ' Entered , 190 — , as second- 
class matter at the post office at — -, act of Congress of , — — ,' being prima 

facie evidence of the right of a publication to transmission in the mails at the second- 
class rates of postage, publishers will, on receipt of the formal certificates of entry, 
cause such notice to be printed, preferably on the first page, in each copy of their pub- 
lications issued thereafter. The insertion of this statement in a publication without 
authority of the department will be held to be submitting ' false evidence relative to 
the character of the publication for the purpose of securing admission thereof at the 
second-class rates for transportation in the mails,' and subject the offender, on convic- 
tion, to a fine of not less than $100, nor more than $500. (Act of June 18, 1888, sec. 
1593, P. L. and R.) There is no objection, however, to the printing on copies of a pub- 
lication mailed at the second-class rates of postage under a conditioned permit, pend- 
ing action of the department on an application for its admission to the second class 
of mail matter, of the words, 'Application has been made to the department for entry 
of this publication as second-class matter.'" (Ruling 308, p. 1034, Jan., 1905, Postal 
Guide.) 

The effect of publishing the announcement that the publication had been entered 
as matter of the second class was to mislead advertisers, and particularly stockholders 
of the publishing company, into the understanding that the Woman's Magazine, which 
was one of the main assets of the company, had been regularly and permanently 
admitted to the mails as a second-class periodical. 

In April, 1906, after having learned by very thorough tests and exhaustive inquiry 
that almost one-half the mailings of the two publications were illegitimate, the post- 
master at St. Louis, acting under instructions from the Post Office Department, began 
collecting from the Lewis Publishing Co. the transient second-class postage rate of 1 
cent a copy on the mailings of the two publications in excess of the number which the 
company was legally entitled to mail. This additional postage has amounted to 
about $7,000 a month. 

The company appealed from the action so taken by the postmaster, and was 
accorded a hearing on April 30 and May 1, 1906, upon the question whether the 
postmaster should be sustained in his action in collecting excess postage, and also 
upon the question whether both the publications should be excluded from second- 
class privileges. Following that hearing the second official inquiry was instituted, 
and as the result of that inquiry the original finding as to the number of subscribers 
to each of the publications was substantially confirmed. This inquiry developed 
that in order to maintain the circulation of the Woman's Farm Journal at 600,000, as 
advertised, and of the Woman's Magazine at the advertised circulation of 1,500,000, 
the company was sending 74 per cent of its mailings of the former publication and 
34 per cent of the latter to persons whose subscriptions had expired. In Conant v. 



174 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

The Postmaster General, decided by the supreme court of the District of Columbia 
in October, 1905, it was held that where a considerable proportion of the persons listed 
as subscribers to a publication appeared to be those whose subscriptions had expired, 
such persons could not reasonably be counted as a part of the legitimate list of 
subscribers. 

The postal laws and regulations treat as subscribers "Those who voluntarily seek 
and pay for the publication with their own money," and as a general proposition it is 
said that a subscriber is "one to whom the publication is sent because he puts his 
money down for it and pays the subscription price." Subscriptions made by indi- 
viduals for those who bear such relation to the donor that it may be said that the 
latter pays the subscription for and on behalf of the person who receives the publica- 
tion, form an exception to this general rule. This exception, however, can not under 
any construction be so extended as to embrace bulk subscriptions made by the 
hundreds. The sample-copy privilege is extended to enable the publisher to solicit 
new subscribers, and not for the purpose of making possible the inflation of the cir- 
culation of the publication to the extent of 50 per cant or more, and thus afford a 
basis for demanding excessive advertising rates. The legitimate press makes use of 
only a small percentage of its current subscriptions as the basis for the circulation of 
sample copies. Generally it disseminates information or knowledge relating to 
public affairs, literature, the arts, the sciences, or to special industries, and owes its 
origin and continued publication to its carrying out of those designs. It is not used 
as an auxiliary to other business interests of the publisher, nor are its editorial columns 
used for the promotion of his financial schemes and ventures. It should be encour- 
aged, but the special rate which it now enjoys can not be maintained unless the 
department deals promptly and effectively with publications such as the Woman's 
Magazine and the Woman's Farm Journal, and which are shown to be grossly abusing 
the second-class mailing privilege, and so depriving the Government of large amounts 
of revenue. 

The use of these publications so largely in the exploitation of other enterprises of 
the president of the publishing company; the sending "free to recipients" of twice 
the number of copies circulated to actual subscribers; the methods used to make the 
number of copies mailed each month correspond with the circulation guaranteed to 
advertisers; the general character of the reading matter of each publication, and 
their circulation at nominal rates of subscription, show plainly that both were "de- 
signed primarily for advertising purposes," and were therefore not entitled to trans- 
mission in the mails at the second-class postage rate of 1 cent a pound. 

It is unnecessary for the purposes of this statement to set forth in further detail 
the reasons for withdrawing from the Woman's Magazine and the Woman's Farm 
Journal the privilege of passing in the mails as matter of the second class, or to refer 
to all the features of those cases, even if it were possible in this space to do so; and 
only an outline of the cases and of the basis for the action taken by the Post Office 
Department upon them is here attempted. 

It is impossible to estimate accurately the total losses which have been suffered 
by the Government during the past four years or more in consequence of the publi- 
cation methods of the Lewis Publishing Co. The total of postage due upon mailings 
of the Woman's Magazine and the Woman's Farm Journal in the period from October, 
1905, to February, 1906, in excess of the number of copies legally transmissible at the 
second-class rate of 1 cent a pound, is ascertained, however, to be approximately 
$120,000, of which about two-thirds is yet unpaid; and this will indicate the extent 
to which the postal revenues have been depleted through the unlawful mailings of 
the company. The president and secretary of the company are under indictment 
in the United States court at St. Louis upon the charge of conspiring to defraud the 
United States of postal revenue, and the former also stands indicted upon the charge 
of using the mails of the United States in the conduct of a scheme to defraud. This 
latter indictment has reference to his promotion through the mails of the People's 
United States Bank, which has been referred to herein. 

Post Office Department, 

Washington, March 19, 1907. 



Exhibit H. 

LEWIS PUBLISHING CO., APPELLANT, V. FRANK WYMAN AND JAMES L. STICE, APPELLEES. 

[United States circuit court of appeals eighth circuit. No. 3038. May term, A. D. 1910. Appeal from 
the circuit court of the United States for the eastern district of Missouri.) 

Mr. Shepard Barclay (Messrs. Carter, Collins & Jones, Mr. P. H. Cullen, and Mr. 
Thomas T. Fauntleroy were with him on the brief) for the appellant. 

Mr. Truman Post Young, assistant United States attorney (Mr. Henry W. Blodgett, 
United States attorney, on the brief) for the appellees. 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 175 

Before Sanborn and Hook, circuit judges, and Amidon, district judge. 

Tins suit was begun March 18, 1907, by the Lewis Publishing Co., the publisher of 
the Woman's Magazine, against Frank Wyman and James L. Stice, respectively the 
postmaster and assistant postmaster at St. Louis, Mo., to enjoin them from depriving 
it of the right to send its publication through the mails as second-class matter at 
the postage rate of 1 cent per pound. The bill of complaint contains a prayer that 
the court ascertain and adjudge the amount of complainant's subscription list for the 
months from September, 1905, to March, 1907, and that defendants be perpetually 
enjoined from interfering with its enjoyment of the second-class mail privilege accord- 
ing to the extent and limits thereof as ascertained and decreed by the court. There 
was also a prayer for general relief. An application for a temporary injunction was 
denied, and upon final hearing the bill of complaint was dismissed. The complainant 
appealed. 

Hook, circuit judge, delivered the opinion of the court: 

The principal contention on this appeal is that the Woman's Magazine, a monthly 
publication, the subscription price of which was 10 cents a year, had been fully accorded 
the right to transmission through the mails as second-class matter at the pound rate of 
postage, and the Postmaster General annulled it without the hearing provided by law. 
(31 Stat., 1107.) The decision of the Postmaster General proceeded upon the assump- 
tion that the case was one of an original application for entry of the publication as 
second-class matter instead of one concerning an entry previously accorded. But 
whatever the true situation in this respect mayhave been and whether a legal hearing 
was had are questions that need not now be determined. After the order complained 
of was made by the Postmaster General and while this suit was pending in the circuit 
court complainant made another application for entry, and upon compliance with 
certain requirements of the department it was granted. Complainant has ever since 
enjoyed the privilege. Manifestly, therefore, whether it had been previously 
accorded, and, if so, whether it was annulled without a hearing, are moot questions. 
The functions of a judicial tribunal do not extend to the declaration of abstract prin- 
ciples of law or the determination of questions of fact not involved in actual contro- 
versy. When the element of controversy disappears from a case through a change of 
circumstances or by the act of the parties the case will be dismissed. It is no answer 
for a party to say he yielded to the stress of the situation. (American Book Co. v. 
Kansas, 213 U. S., 49; Mills v. Green, 159 U. S., 651.) Complaint is made, however, 
that the right finally accorded complainant is not all it was entitled to under the law. 
In admitting the publication to entry at the second-class rate the department limited 
the sample copies that might be so transmitted through the mails to a number equal 
to that of the legitimate subscribers. It is contended that when a publisher has once 
been accorded the second-class privilege there is, as long as he retains it, no limit to 
the number of sample copies he can send through the mails at the pound rate. This 
contention is based on the language of the act of March 3, 1885, which prescribes a 
postage rate of 1 cent per pound, or fraction thereof, for publications of the second 
class "including sample copies." (23 Stat., 387.) The act does not specifically place 
a limit on the number of sample copies, and it is claimed the department can therefore 
impose none. The words "including sample copies" were also in the act of March 3, 
1879. (20 Stat., 355.) We think that under the authority conferred by Congress 
(Rev. Stat., 161) upon the head of the department to prescribe regulations not incon- 
sistent with law for the performance of its business, the Postmaster General may 
lawfully impose such a limitation. The act of Congress does not purport to grant an 
unlimited privilege as to sample copies, and its very generality and indefiniteness 
invites a supplementary regulation. It is not necessary to the validity of a depart- 
mental regulation that specific statutory authority for it be discovered. It would be 
impracticable to set forth in the statutes all the rules for the conduct of the business of 
the great executive departments of the Government, and Congress has wisely confined 
itself to marking general outlines and imposing general limitations, leaving the sub- 
ordinate and supplemental details suggested by practical experience to be prescribed 
by the heads of the departments. A departmental regulation must not be inconsistent 
with the statutes, but it may be by way of execution or supplement. 

There is another consideration which bears upon the limitation of the number of 
sample copies that may be mailed at the second-class pound rate. Section 14 of 
the act of March 3, 1879, excludes from the second-class rate "regular publications 
designed primarily for advertising purposes, or for free circulation, or for circulation 
at nominal rates." In the sense of the statute, "primarily" means "chiefly or prin- 
cipally." The second-class pound rate of postage was intended for newspapers and 
periodicals published for the dissemination of information of a public character or 
devoted to literature, the sciences, arts, or some special industry and circulated 



176 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

for the most part among bona fide subscribers and not for publications designed 
principally for advertising purposes or for free circulation or circulation at nominal 
rates. Obviously the number of copies distributed gratuitously has a direct bearing 
upon the primary or chief design of the publication, whether really for subscribers 
at a substantial or compensatory price or, on the other hand, at a nominal price and for 
advertising purposes. 

It is also contended that, though a general postal regulation has been prescribed 
making an excess of sample copies evidence that the publication is primarily designed 
for advertising, etc., there is none authorizing the imposition of a higher postage rate 
on such excess while the entry as second-class matter remains in force, unrevoked. 
We think, however, the authority denied by complainant is deducible from sections 
436 and 456 of the Postal Laws and Regulations, 1902. (See also . .o. 338, Postal Guide, 
Dec. 1, 1905, p. 1041, and Circular XXV at p. 1045.) 

Our attention is directed to various amendments of the regulations affecting mail 
matter of the second class promulgated December 4, 1907, and effective January 1, 
1908, the latter date being subsequent to the entry finally accorded complainant's 
publication. These amendments are not directed specially at complainant but 
affect all publications of that class in the country, and it would be foreign to our province 
to attempt a general judicial examination of them to define for the future the status 
of complainant's magazine and its rights. The courts do not sit in general review 
of the actions of the executive departments but await the occurrence of some concrete 
controversy and its presentation according to the settled rules of pleading and practice. 

During the existence of the controversy complainant paid under protest $20,650 
for postage in excess of the amount calculated at the second-class pound rate and also 
gave bonds for the payment of other sums. It is now contended that this suit should 
proceed for the recovery of the excess payments from the defendants and for the dis- 
position of the bonds that were given. As already stated, the defendants were, respec- 
tively, the postmaster and assistant postmaster at St. Louis, Mo. The acts of Congress 
make it the duty of a postmaster to deposit all postage receipts at his office in the Treas- 
ury of the United States, and a neglect to do so is an offense. (Rev. Stat., 407, 4051, 
4053, 4054.) There are some qualifications of this, but they do not affect the point 
presently to be mentioned. The act of March 3, 1905 (sec. 2, 31 Stat., 1091), provides 
that whenever "it is shown to the satisfaction of the Postmaster General " that postage 
has been collected in excess of the lawful rate, "he may in his discretion" authorize 
the postmaster to refund the amount out of postal receipts in his hands. It would be 
an interesting question whether the doctrine of Cary v. Curtis (3 How., 236) applies, 
and an action would lie against the defendants under the circumstances shown in the 
record. (See also Curtis' Admr. v. Fiedler, 67 U. S.,461; The Collector v. Hubbard, 
12 Wall., 1; Philadelphia v. Collector, 5 Wall., 720.) It should be observed in this 
connection that Teal v. Felton (12 How., 284) was an action in trover for wrongfully 
detaining a copy of a newspaper, not an action to recover postage claimed to be exces- 
sive, but which the law required the postmaster to deposit where it was no longer under 
his control. Again, the amounts claimed by complainant as excess payments are 
withheld according to the decision of the department as to the number of the legiti- 
mate subscribers to complainant's publication and the number of sample copies com- 
plainant was entitled to mail at the pound rate. The question suggests itself whether 
this decision of the department is one of fact or of mixed law and fact and, therefore, 
within Bates & Guild Co. v. Payne (194 U. S., 106, 109), where it was said: 

"The rule upon this subject may be summarized as follows: That where the decision 
of questions of fact is committed by Congress to the judgment and discretion of the 
head of a department, his decision thereon is conclusive; and that even upon mixed 
questions of law and fact, or of law alone, his action will carry with it a strong pre- 
sumption of its correctness, and the courts will not ordinarily review it, although they 
may have the power, and will occasionally exercise the right of so doing." 

But these questions need not be determined. If complainant has a cause of action 
for the excess payments made under protest it is clearly a legal one; and adequate 
relief against the bonds given by complainant is obtainable by defense when action 
is brought on them by the Government. There is nothing of an equitable character 
in the cause of action or the defense. True, when involved in a suit of which a court 
of equity has jurisdiction, matters of legal cognizance maybe disposed of if incidental 
to the equitable relief that is granted. But it appears here that at the instance of 
complainant the case it had in court assumed such a phase that no injunction or other 
equitable relief could be granted. It is as though complainant had amended its bill 
by withdrawing all averments calling for the interposition of a court of equity. Under 
such circumstances a court should not retain the case for purposes purely legal. In 
Dowell v. Mitchell (105 U. S., 430) the court said: 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 177 

"The rule is that where a cause of action cognizable at law is entertained in equity 

on the ground of some equitable relief sought by the bill, which it turns out can not, 
for defect of proof or other reason, be granted, the court is without jurisdiction to pro- 
ceed further, and should dismiss the bill without prejudice." 

(See also Kramer ». Conn, 119 U. S., 355; Lewis Pub. Co. v. Wyman, 168 Fed., 756; 
Cumberland Building & Loan Ass'n. v. Sparks, 106 Fed., 101.) There is a qualifica- 
tion of the rule in patent cases where complainant is entitled to an injunction when 
the suit is begun but the patent expires before final decree. It is held in such cases 
there may nevertheless be an accounting for damages and profits. (Carnegie Steel 
Co. v. Colorado Fueicfc Iron Co., 91 C. C. A., 229, 165 Fed., 195.) But the general rule 
is as above stated. 

It is suggested thaY->round of equity jurisdiction will be found m the necessity lor an 
accounting as to an alleged excess of postage exacted by the Government. Passing the 
question whether mere volume of items in the claim of a party and the difficulty of 
proving them makes a complexity or intricacy of accounts for cognizance in equity 
(United States v. Bitter Root Co., 200 U. S., 451), it is clear this suit was for an injunc- 
tion, not for an accounting except as the latter might be an incident to the awarding 
of aninjunction. There was no prayer for an accounting. The prayer for general relief 
means relief agreeable to the case made in the bill. Lewis Pub. Co. v. Wyman (168 
Fed., 756), which was a case involving another publication of complainant, is in point. 
In this connection we note the statement in defendant's brief that other cases are 
pending in which the complainant here is seeking to recover the postage paid under 
protest and also cases in which the Government claims postage still due on excessive 
mailings. . ..... 

The dismissal of complainant's bill should, however, have been without prejudice 
to its rights at law in respect of the excess payments of postage and the bonds. 

The cause is remanded to the circuit court'for a modification of the decree accord- 
ing', and, as so modified, the decree is affirmed. 

Filed August 20, 1910. 

Saxborw circuit judge, dissenting. 

I find myself unable to concur in the opinion of the majority that this has become 
a moot case or that the complainant has a remedy at law so prompt and efficient as 
to bar relief in equity. The admissions of the defendants and the evidence in this 
case have convinced'me that the Woman's Magazine was admitted to transmission 
in the mails as second-class matter in October" 1902, that from that time forward 
the complainant was entitled, under the repeated rulings of the officers of the postal 
department and under the statutes and the regulations applicable to that department, 
to the transmission of sample copies of the Woman's Mngazine equal in number to 
the copies sent to legitimate subscribers and that these copies of the magazine were 
transmitted as second-class matter with the knowledge, consent, and approval of 
the officers of the Post Office Department under their admission of October, 1902, 
until March 4. 1907. Those officers and the Government for whom they were author- 
ized to act in this matter were estopped by these acts from denying that this magazine 
was entitled to the benefits of transmission as second-class matter at the pound rate 
of hostage. (Judson v. United States, 120 Fed., 637, 643; Kihlberg v. United States, 
97 U. S., 398; United States v. Bonness, 125 Fed., 485, 489; State of Michigan v. Jack- 
son, L. <k S. R. Co.. 09 Fed., 116, 123; United States v. Willamette Valley & C. M. 
Wagon-Road Co., 54 Fed., 807, 811; Lytle v. State of Arkansas, 9 How., 314, 332; Wirth 
v. Branson. 98 U. S., 118, 121; Harrison v. Lewis, 27 Ark., 152, 154.) 

The act of March 3, 1901, 31 Stat,, c. 851, p. 1107, provides that "When any publi- 
cation has been accorded second-class mail privileges the same shall not be suspended 
or annulled until a hearing shall be granted to the parties interested. " A reasonable 
notice to the parties interested that the question whether or not a second-class mail 
privilege shall be suspended or annulled will be heard, of the charges on which the 
demand for suspension or annulment is founded, and of the time and place of the 
hearing, together with a presentation to the parties interested of all of the evidence in 
support of the charges and a reasonable opportunity thereafter to present at the hear- 
ing evidence and argument in opposition to this evidence, are indispensable elements 
of the notice and hearing required by this statute. (In re Wood and Henderson, 210 
U.S., 246, 254; In re Rosser, 101 Fed., 562, 567; Michigan Trust Co. v. Ferry, 175 Fed., 
667, 678.) On March 4, 1907, without any notice of any hearing upon the question of 
the suspense >n or annulment of the second-class mail privilege which the complainant's . 
publication had been admitted to enjoy, after a hearing at which the officer of the Postal 
Department in charge thereof informed the complainant that the only question then 
to be heard was whether or not the legitimate subscriptions to the Woman's Magazine 
exceeded 539,901, and at which hearing he expressly denied the request of the com- 

86534°— 11 12 



178 BELIEF OF THE LEWIS PUBLISHING COMPANY. 

plainant to Bee or to hear and to know the evidence against it upon the charge that 
was on hearing and at which this officer and the department withheld from the com- 
plainant all knowledge of this evidence, the officers of the Post Office Department 
suspended and annulled the second-class privilege that had been accorded to the 
Woman's Magazine and refused to accept any copies of it for mailing at the second- 
class pound rate of postage. This order of the department was in my opinion beyond 
its powers and void because it was made without the notice and without the hearing 
which conditioned the jurisdiction of the officers of that department to make it. 
At that time the Woman's Magazine had more than 850,000 legitimate subscribers, 
and the complainant was entitled under repeated rulings of the Post Office Depart- 
ment and under the law to send through the mails as second-class matter as many 
sample copies as it had legitimate subscribers, or 1,680,000 copies in all. The illegal 
order of the department prevented the complainant from sending any of these copies 
through the mails at the second-class rate in the months of April, May, June, July, 
August, September, October, and November and, after December 17, 1907, prevented 
it from sending more than 686,682 copies. 

On March 18, 1907, the complainant exhibited its bill, which set forth the facts 
which have been recited and the further fact that the defendants unlawfully had 
restricted the number of copies of the Woman's Magazine entitled to transmission 
at the second-class pound rate between April, 1906, and March, 1907, to 539,308, and 
had unlawfully required the complainant to deposit, and it had deposited with the 
defendants under protest, $17,150 to secure the payment of the unlawful amounts 
demanded by them for postage in excess of the second-class pound rate on copies of 
the magazine which the complainant was entitled to send at that rate. The com- 
plainant prayed for a preliminary injunction against the enforcement by the defend- 
ants of the order of March 4, 1907, excluding the Woman's Magazine from transmission 
through the mails at the second-class pound rate, that the number of its legitimate 
subscribers from September, 1905, to March, 1907, be ascertained and adjudged by 
the court, and for general relief. The record discloses the fact that the defendants 
compelled the complainant to deposit $20,650 for postage in excess of the second-class 
pound rate and compelled it to give bonds for the payment of other large sums, and it 
now asks that the amount owing by it on account of these claims be adjudicated, that 
the balance above the amount thus owing be returned to it, and that the bonds be 
canceled by decree of the court. 

On April 18, 1907, the court below denied the motion of the complainant for a pre- 
liminary injunction upon the erroneous ground that the Woman's Magazine had never 
been admitted to the privileges of the second-class pound rate of postage, and at the 
final hearing it rendered a decree for the defendants, from which the complainant has 
taken this appeal. Under the pleadings and the facts which the record thus presents 
the complainant was entitled in my opmion to the preliminary injunction for which 
it prayed in 1907, and at the final hearing to an adjudication of the number of copies 
of the magazine entitled to transmission at the second-class pound rate from Septem- 
ber, 1905, to the commencement of this suit, to an accounting of the amount due on 
account of the claims for postage for which the deposit of $20,650 was made, to a decree 
for the return of the balance of that deposit above the amount which was justly due 
on account of this claim of excess postage, and to a decree of avoidance of the bonds 
which it had been compelled to give. 

The objection that there is no specific prayer in the bill for this accounting, for 
the determination of the amount due to the complainant on account of these deposits 
and for the cancellation of its bonds, does not seem to me to be either substantial or 
tenable. Both the pleadings and the evidence presented facts which entitle the 
complainant to this relief. No objection to the prayer of the bill was made in the 
demurrer. It is the settled rule and practice in equity to grant under the general 
prayer any relief to which the facts set forth in the bill entitle the complainant, 
although he is not entitled to the specific relief for which he prays. (Wa^ts v. Waddle, 
6 Pet., 389, 402; Sage v. Central R. R. Co., 99 U. S., 334: London & San Francisco 
Bank v. Dexter Horton & Co., 61 C. C. A., 515, 528, 126 Fed. 593, 606; Moore v. 
Mitchell, 17 Fed. Cases, 692, 694.) By so much the more may such a court grant 
under the general prayer relief to which the facts pleaded entitle the party when he 
is also entitled to the specific relief he prays. Wilson v. Plutus Mining Co., 174 
Fed., 317, 320.) "There is nothing in the intricacy of equity pleading," says the 
Supreme Court, "that prevents the plaintiff from obtaining the relief under the 
general prayer, to which he may be entitled upon the facts plainly stated in the bill. 
There is no reason for denying his right to relief, if the plaintiff is otherwise entitled 
to it, simply because it is asked under the prayer for general relief and upon a some- 
what different theory from that which is advanced under one of the special prayers." 
(Lockhart v. Leeds, 195 U. S., 427, 436, 437.) 



RELIEF OF THE LEWIS PUBLISHING COMPANY. 179 

The evidence in this record and the admissions of the defendants in their pleadings 
in my opinion render the defendants liable at law and also in equity for the amount 
of these deposits in excess of the postage justly due on account of the claims made 
by the defendants. To my mind the facts they present lead unavoidably to the 
conclusion that thc^e moneys and bonds were extorted from the complainant without 
lawful authority and leave the defendants without justification. While they may be 
liable at law, equity ha3 concurrent jurisdiction with the law in all cases where a 
Long and complicated account composed of numerous items is in controversy. And 
it is an established and familiar rule of equity jurisprudence that the power is con- 
ferred and the duty imposed upon a court of equity which has jurisdiction to grant 
some equitable relief, to exercise its power to determine the entire controversy relative 
to the subject matter between the parties in all its branches. The court below undoubt- 
edly had plenary jurisdiction and it was its duty to issue the preliminary injunction 
in 1907. It had complete authority and it was its duty to take and adjudicate the 
accounting between the parties which conditioned their rights to the $20,650, which 
had been "deposited with the defendants by the complainant under protest and on 
either ground it seems to me there was ample jurisdiction in equity to determine the 
entire controversy. 

That the right to an injunction at the time when the bill is filed will sustain the 
grant of full relief, although at. the final hearing of the case the right to the injunction 
has expired bv lanse of time, is well settled, not onlv in patent cases (Busch v. Jones, 
184 U. S., 598; Clark v. Wooster, 119 U. S., 322, 325; United States Mitis Co. v. Detroit 
Steel & Spring Co., 122 Fed., 863, 866; New York Sugar Co. v. Peoria Sugar Co., 21 
Fed., 878; Chinnock v. Patterson P. & S. Tel. Co., 110 Fed., 199; Davenport v. Rylands, 
L. Pv. 1 Eq., 302), but also in suits in equity in which infringements of patents are not 
involved (People v. Chicago, 53 111., 424, 428; State v. Johnson, 56 111., 45, 56; Spears 
v. New York, 87 N. Y., 359, 376; Dulanev v. Scudder, 94 Fed., 6; Patterson v. Barber 
Asphalt Pav. Co., 94 Minn., 39, 43; Tavloe v. Merchants Fire Ins. Co., 50 U. S., 390, 
405). 

Again, the determination of the portion of the §20,650 which the complainant is 
entitled to recover from the defendants involves a long and complicated account 
consisting of millions of items. For every copy of the magazine in excess of the 
539,308 copies which the Government admitted the complainant was entitled to 
transmit prior to March, 1907, may furnish a material item of this account. While 
an action at law may undoubtedly be maintained for the amount to which the com- 
plainant is entitled here, a court of equity has concurrent jurisdiction of this account- 
ing. And such a court with its deliberate methods, its power to select men of training 
and experience in work of this nature, its authority to consider and modify their 
reports after exceptions and hearings, is alone competent to take fairly and to adjudi- 
cate justly the balance of such an account. The remedy at law which necessitates 
the submission of such questions to a jury is neither adequate nor as efficient to attain 
the ends of justice as the remedy in equity, and it can not bar the latter. (Kirby v. 
Railroad Co., 120 U. S., 130, 132, 134; Gunn v. Brinkley Car Works & Mfg. Co.', 66 
Fed., 382, 384, 13 C. C. A., 529, 531; Fechteler v. Palm Bros. & Co., 133 Fed., 462, 
465, 66 C. C. A., 336; Hayden v. Thomnson, 71 Fed., 60, 63, 17 C. C. A., 592, 595; 
Castle Creek Water Co. v. City of Aspen, 146 Fed., 8, 14, 76 C. C. A., 516, 522.) 

It does not seem to me that the fact to which the majority advert that sections 407, 
4051, 4053, and 4054 of the Revised Statutes require postal revenues and amounts col- 
lected for debts due to the Post Office Department and amounts realized from the sales 
of property of that department to be deposited by the postmaster and the other officers 
of the department in the Treasury of the United States, and make a neglect to do so an 
offense, is material to the determination of the questions presented in this case. 

The general rule of law is that an officer who, without authority or unlawfully, col- 
lects moneys from a victim who pays them under protest in order to obtain or preserve 
his legal rights is liable to a suit therefor as a private person, because he has no lawful 
power to collect such moneys as an officer, and his illegal act is that of himself as a pri- 
vate citizen, for which he is' personally liable. (Elliott v. Swartwout, 10 Pet., 137, 155, 
156; Bend v. Hoyt, 13 Pet., 202, 2660 So an officer who unlawfully seizes property 
or infringes a patent is individually liable for the damages he causes, and the fact that 
he believes that he has lawful authoritv to do the act as an officer of the United States 
is no defense. (Bates y. Clark, 95 U. S., 204, 208-209; Belknap v. Schild, 161 U.S., 
10, 18; Reagan v. Farmers' Loan & Trust Co., 154 U. S., 362, 391.) There is, it is true, 
an exception to this general rule, and that exception is that where a specific act of 
Congress requires an officer to pay into the Treasury of the United States money which 
he unlawfully exacts from his victim or moneys which he secures for unascertained 
liabilities, and where the officer makes such payments in accordance with this statute, 
and the statute provides for the repayment to'the victims of the amounts unlawfully 



180 RELIEF OF THE LEWIS PUBLISHING COMPANY. 

exacted, the officer is exonerated from liability either as an officer or individually. 
(Gary v. Curtis, 3 How., 235, 240.) But the acts of Congress cited by the majority, 
sections 407, 4051, 4053, 4054, Revised Statutes, as I understand them, require the 
officers and employees of the Post Office Department to pay into the Treasury only the 
moneys they have authority to collect and those they lawfully collect for the United 
States, and there is no statute that makes it the duty of these officers to pay into the 
Treasury of the United States their unauthorized or illegal exactions, so that it eeems 
to me that this case falls under the general rule and not under the exception. In my 
view of the case the defendants as individuals hold the complainant's money as 
trustees de son tort to the extent of the amount they illegally exacted from it, and they 
are liable to account for and to pay these moneys back to the complainant in equity 
as well as at law. 

Finally, the fact that the complainant, which was deprived of all its rights to use 
the mails during the months of April, June, July, August, September, October, and 
November, 1907, and of the accounting concerning the return of the amount due it 
on account of its deposits ever since they were made, succeeded on a new application, 
made in September, 1907, in obtaining a part of its right to use the mails since Decem- 
ber 17 in that year, does not appear to me to have waived its right to the accounting 
and the adjudication of the amount due it on account of the deposits or to the deter- 
mination of its right to a cancellation of its bonds. Suppose that a common carrier 
by railroad compelled a shipper to deposit $20,650 with it for the privilege of trans- 
mitting its goods over its railroad at regular rates for nine months on the claim that 
he ought to pay $20,650 more than the regular rates, and suppose that the carrier then 
prohibited the shipper from transmitting any of his goods over its railroad at any 
price for eight months and the shipper brought suits for an injunction against that 
prohibition and for an accounting and a return of his deposits. Would the fact that 
the carrier subsequently permitted the shipper to transmit a portion of new goods he 
had manufactured and delivered after the suit was brought deprive the shipper of 
his causes of action for the accounting and for the wrong or render his suit for relief 
therefrom a moot case? It seems to mo that this question should be answered in the 
negative and that the complainant's right to the accounting and adjudication of the 
controversy over the moneys it deposited under protest in order that it might be per- 
mitted to exercise its right prior to March, 1907, remains unadjudicated and unaffected 
by the fact that it succeeded in exercising a part of its right in December, 1907, and 
thereafter, and that the wrong inflicted upon it by the refusal to permit it to exercise 
that right according to law from March, 1907, to December, 1907, still remains unre- 
dressed and unreleased. In my judgment the decree below should be reversed and 
full relief in equity should be granted to the complainant in this suit. 

Filed August 20, 1910. 

A true copy. 

Attest: 

[seal.] John D. Jordan, 

Clerk U. S. Circuit Court of Appeals, Eighth Circuit. 

O 



LB N 'I 



